The Study On Financing Of The Distribution Chain Based On The Supply Chain Finance

The distributors that in the middle position of the distribution chain often have to accept adverse trade conditions due to their strong upstream manufacturers and downstream customers.In order to achieve their financial economics,large enterprises tend to transfer the inventory to distributors or delay payments to suppliers. As a result, distributors would delay settlement or loan at a high cost and suppliers would delay the order of raw material. For small distributor which owns a weak bargaining power, this kind of trade mode will do damage to its cash flow. Because most of its assets are paid in the form of accounts receivable, inventory and so on. That would take up a lot of liquidity. Previous stable chain model has brought financial problems to the company. Due to the way to financing only by distributors' strength and credibility is not only inefficient but also costly, it will eventually become the sales bottleneck of core enterprise.This paper established a three-level distribution chain which core business and its distributors, downstream customers are included. What is more, the distributor is facing financing difficulties because of the press from core enterprises and the retailers. Through the introduction of supply chain finance, the ways how to improve the cash flow of the distributor are studied. Firstly, the cash flow risk of distributors brought by the delayed payment of accounts receivable is studied from the view of distribution chain. Based on cash conversion cycle theory, the paper studies the cash flow risks of the distributor and research the relationship between the risk of the net inflow of cash and each payment ratio of accounts receivable, cash discount and the discount rate. Secondly, the financing of distribution chain on the base of accounts receivable is analyzed. Game model is established to compare the accounts receivable financing under supply chain finance and traditional receivables financing.It could be proved the former make Pareto efficiency. Then considering the repayment will of the retailer, based on the relationship between the debtor's repayment and the proportion of accounts receivable pledge rate, tripartite expected revenue matrix could be created and it is explored in depth from both the view of the bank and the distribution chain. Finally, a case is studied.The main conclusion is: The optimal policy of accounts receivable management for enterprises is proposed. Under that policy, the risk of cash flow will be reduced. The pledge of accounts receivable financing rate formula is also given.At the same time, some recommendations related to accounts receivable financing are respectively given to the distributor and the bank.