Research On Reverse Factoring Strategies In Supply Chain Finance

During the rapid development of Chinese economy,SMEs has been a crucial part of component.However due to the low credit rating and not having enough collateral,financing has always been a huge cost.With supply chain finance expanding ways SMEs can finance,customized to Chinese economic environment,reverse factoring is a great option for supply chain SME.Currently there is little research done on reverse factoring,and the application of reverse factoring in China is still at an early stage.Retailer’s recommendation is the start of supplier’s reverse factoring,but retailers’ research on the impact of supplier’s reverse factoring is lacking.Based on this,this article has carried out related research,and the research results can provide guidance for the smooth implementation of reverse factoring in China.This paper compare the cash flow under traditional financing and reverse factoring,the yield spread model based on time value of money is used to analyze the contract value of reverse factoring compared with traditional financing.Then based on the Bass diffusion model,the model of reverse factoring propagation under market factors and retailer factors was separately constructed to compare communication effectiveness of market factors and retailer factors.And based on previous models,a decision factor analyzation of the input of reverse factoring into retailer industry is conducted.We find the financing cost gap between suppliers and retailers,the wholesale price,as well as,the aggressiveness of supplier capital policy has a positive correlation with the value of reverse factoring.The higher the factoring service rate and the longer the accounts receivable period,leading to the less the supplier gains from reverse factoring.When the accounts receivable period is long enough,although the reverse factoring will bring positive benefits to the entire supply chain,the suppliers’ income is negative at this time,and they will reject the reverse factoring.The supplier’s acceptance of reverse factoring is affected by both market factors and retailer factors,and the retailer factor has a greater impact.The reverse factoring of retailers increases with the extension of the account receivables period,and also it increases with the difference value between product cost and price.