The joint effects of lead time, information sharing, and the accounts receivable period on reverse factoring

Abstract

Purpose The purpose of this paper is to empirically investigate the joint effects of lead time, information sharing and the accounts receivable period on reverse factoring (RF) adoption from the suppliers’ perspective. Design/methodology/approach Supported by one of the largest commercial banks in China, survey data are collected from 424 Chinese manufacturing firms and analyzed using regression methods. Findings The results suggest that lead time positively affects suppliers’ RF adoption directly and indirectly through the accounts receivable period. Meanwhile, information sharing has a positive, direct and a negative, indirect influence on suppliers’ RF adoption. Originality/value The findings give suppliers and financial institutions a better understanding of how to leverage the benefits of RF.

Relevance of the cooperation in financing the automobile industry's supply chain: the case of reverse factoring

“…Among the features of the governance mode that sustains the automobile industry's supply chain, cooperation has attracted the most attention (González-Benito, Lannelongue, and Alfaro-Tanco, 2013; Guerrini and Pellegrinotti, 2016; Huang et al , 2020a, b). It is a characteristic defined by the dependence of the buyers and suppliers, and the establishment of long-lasting, cooperative relationships between them (Huang et al , 2020a, b).…”

“…Among the features of the governance mode that sustains the automobile industry's supply chain, cooperation has attracted the most attention (González-Benito, Lannelongue, and Alfaro-Tanco, 2013; Guerrini and Pellegrinotti, 2016; Huang et al , 2020a, b). It is a characteristic defined by the dependence of the buyers and suppliers, and the establishment of long-lasting, cooperative relationships between them (Huang et al , 2020a, b). Some authors point out that supply chain management in the industry follows a model of a buyer–supplier relationship based on trust and a commitment to collaborate in the long term, which involves both parties sharing information, risks, and benefits (Tortorella et al , 2018).…”

“…Implementation-related factors include elements of process management (e.g., information technologies, requirements or simplifications to conduct the operation) (Shuzhen et al , 2014; Dello Iacono et al , 2015). Contextual factors include legal and regulatory aspects (Mol-Gómez et al , 2018), or financial market conditions, such as the availability and interest rates of external financial resources (Kouvelis and Xu, 2018; Huang et al , 2020a, b). Some aspects of cooperation have been explicitly pointed out as enabling factors.…”

“…Factoring can be operated in two ways: as traditional factoring (seller centered) or reverse factoring (RF) (i.e., buyer centered). The latter has gained relevance because of the growing attention it has received recently in the SCF literature (Huang et al , 2020a, b; Pérez-Elizundia et al , 2020). In RF, a bank undertakes the buyer's credit risk, provided that it has a good solvency stand, thus allowing its suppliers to access working capital financing at an affordable cost by assigning collections right to the bank (Tanrisever et al , 2012).…”

“…First, these works have focused solely on economic and financial reasons as motives for RF adoption (Grüter and Wuttke, 2017; Lekkakos and Serrano, 2016). This has made it difficult to identify cooperation motives and their impact on RF adoption, a relevant aspect for the automobile industry, since cooperation among buyers and suppliers mainly conditions supply chain management (Attias and Mira-Bonnardel, 2017; Huang et al , 2020a, b). Second, the results of these works suggest that the features of each industry determine RF adoption (Tanrisever et al , 2012; van der Vliet et al , 2015), which is true for the automobile industry's supply chain, which possesses specific features.…”