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| Research on the Adoption of Prepayment Financing from Supply Chain Management Perspective |
| HUANG Qiuping,ZHAO Xiande,WANG Zhiqiang,LIANG Chaojie |
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Abstract Based on supply chain management theory and working capital management theory, this paper analyzes the factors that influence the firms’ adoption of prepayment financing from the supply chain management & operational management perspective. This paper fits the probability of firms’ adoption of prepayment financing by using Binary Logistic Regression based on the survey data of supply chain financing which are collected from 717 firms in China. The results show that, from the firms’ financing need perspective, firms are more likely to adopt prepayment financing when the average raw materials delivery cycles are longer and price volatility of the raw materials is higher. Take financial institutions’ credit risk control into consideration, compared to the firms with low price volatility of the raw materials, high informationization level helps the firms with high price volatility of raw materials get the financing form the financial institutions greater. And this paper argues that financial institutions are more likely to financing the firms whose raw materials inventory average turnover days are shorter, because financial institutions can insure the source of repayment. And the firms that adopt prepayment financing have motivation to manage raw materials inventory better. Because it would add the extra financing cost for the firms that adopt prepayment financing, the firms have to manage raw materials inventory better to reduce raw materials inventory average turnover days, close the financing round earlier, and then reduce the financing cost.
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Received: 15 April 2014
Published: 15 August 2014
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Corresponding Authors:
HUANG Qiuping
E-mail: qiuqiu0624@126.com
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2014, Vol. 
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