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Financing a capital-constrained supply chain: factoring accounts receivable vs a BCT-SCF receivable chain

Dan Tang (College of Business Administration, Northeastern University, Shenyang, China)
Xintian Zhuang (College of Business Administration, Northeastern University, Shenyang, China)

Kybernetes

ISSN: 0368-492X

Article publication date: 23 October 2020

Issue publication date: 22 July 2021

595

Abstract

Purpose

Blockchain-driven supply chain finance (BCT-SCF) has recently been receiving increased global attention. A number of business programmes have been carried out using this approach, but existing research has rarely focussed on this novel SCF model. This paper aims to fill this gap by proposing a mathematical model to analyse the value of BCT-SCF.

Design/methodology/approach

First, this paper considers a multi-period two-echelon supply chain consisting of a capital-constrained supplier and a newsvendor-like retailer. Then, two financing channels are proposed. The supply chain actors can either factor accounts receivable (AR) from a bank or obtain financing through a BCT-SCF platform by which AR can be converted into a bill receivable and used to make payment. Further, to investigate the preferences of all actors between the two financing channels, this paper compares the two channels and examines how the degree of financial constraints and the cost of implementing the BCT-SCF model impact the financing preferences of all actors.

Findings

BCT-SCF model can help a supply chain realise its optimisation both in production and financing efficiency, the preference for the BCT-SCF model increases as the initial capital of supplier and the BCT-SCF platform usage fee rate decrease.

Practical implications

This research bridges the gap between theoretical analysis of BCT-SCF and its realistic application. The results demonstrate that with the BCT-SCF model, a win-win situation among supply chain actors is possible, which is helpful for the supply chain to choose a more efficient financing channel.

Originality/value

This research introduces a mathematical model based on the “receivable chain” of CZBank and the model is set in a multi-period supply chain, which is the first time BCT-SCF has been considered as part of a more complex but realistic background setting.

Keywords

Acknowledgements

The authors thank the editor and anonymous reviewers for their suggestions. This study was funded by the National Natural Foundation of China No 71671030 and 71571038.

Citation

Tang, D. and Zhuang, X. (2021), "Financing a capital-constrained supply chain: factoring accounts receivable vs a BCT-SCF receivable chain", Kybernetes, Vol. 50 No. 8, pp. 2209-2231. https://doi.org/10.1108/K-06-2020-0367

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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