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Why and How Does a Supplier Choose Factoring Finance?
Joint Authors
Chen, Dongyan
Tian, Chunying
Chen, Zhaobo
Zhang, Ding
Source
Mathematical Problems in Engineering
Issue
Vol. 2020, Issue 2020 (31 Dec. 2020), pp.1-14, 14 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2020-01-13
Country of Publication
Egypt
No. of Pages
14
Main Subjects
Abstract EN
Suppliers offering trade credit to the downstream retailers have to face many problems, such as receivables management, capital occupancy, and buyer’s credit risk.
Many of them choose factoring finance to solve those problems simultaneously.
This paper develops several supply chain decision models to show the benefits a supplier can obtain from the main functions of factoring and how he should choose between recourse factoring and nonrecourse factoring.
In particular, we identify the conditions on which factoring may bring benefits (including financial benefit, guarantee benefit, and receivables management benefit) to the supplier.
The supplier’s choice between recourse and nonrecourse factoring relies on his risk attitude.
Given that the supplier is risk-neutral and the factoring fees are acceptable, recourse factoring is preferred when the factoring finance ratio is relatively high; otherwise, nonrecourse factoring is preferred.
However, if the supplier is risk-averse, his preference for the two factoring schemes under different finance ratios may change when the risk constraints become stricter.
If the target profit is lower than a certain level, the supplier’s financial choice will switch from recourse factoring to nonrecourse factoring in the case finance ratio is relatively low; otherwise, his financial choice switches from nonrecourse factoring to recourse factoring in the case finance ratio is relatively high.
American Psychological Association (APA)
Tian, Chunying& Chen, Dongyan& Chen, Zhaobo& Zhang, Ding. 2020. Why and How Does a Supplier Choose Factoring Finance?. Mathematical Problems in Engineering،Vol. 2020, no. 2020, pp.1-14.
https://search.emarefa.net/detail/BIM-1202106
Modern Language Association (MLA)
Tian, Chunying…[et al.]. Why and How Does a Supplier Choose Factoring Finance?. Mathematical Problems in Engineering No. 2020 (2020), pp.1-14.
https://search.emarefa.net/detail/BIM-1202106
American Medical Association (AMA)
Tian, Chunying& Chen, Dongyan& Chen, Zhaobo& Zhang, Ding. Why and How Does a Supplier Choose Factoring Finance?. Mathematical Problems in Engineering. 2020. Vol. 2020, no. 2020, pp.1-14.
https://search.emarefa.net/detail/BIM-1202106
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-1202106