Abstract
This paper studies the model of accounts receivable supply chain financing based on credit insurance from the perspective of banks. First of all, the paper analyzes two different financing modes of the innovative model - the pledge financing mode and the factoring financing mode. Secondly, the paper explains the sources of credit risks for accounts receivable supply chain financing under credit insurance, and the necessity of using credit insurance. The sources of credit risks mainly include: the enterprises’ comprehensive strength under systemic and non-systemic risks, status of accounts receivable, supply chain operation, performance of insurance companies, and so on. In addition, based on the credit risks explained in this paper, the risk assessment system and the credit risk assessment model are built. At the end, the paper offers three suggestions for the banks’ financing risk control: bank should carefully check the policy’s exclusions clauses; bank must carefully check the authenticity of accounts receivable; bank can use dynamic monitoring on qualification checking for financing enterprises, core enterprises and insurance companies.
Highlights
For most enterprises, difficult and expensive financing has always been a major obstacle to development, and they are directly adversely influenced by issues related to capital constraint on supply chain performance and competitiveness
To make the financing mode accepted by all participants, proper credit risk assessment should be attached with importance and run through its implementation.[1]
When dealing with applications of accounts receivable supply chain financing based on credit insurance, the bank should require that the accounts receivable used in the application must be attached with verification documents issued by the core enterprise and they must be held by the financing enterprise
Summary
Difficult and expensive financing has always been a major obstacle to development, and they are directly adversely influenced by issues related to capital constraint on supply chain performance and competitiveness. Under such background, the accounts receivable supply chain financing based on credit insurance, as a new option of financing modes in China, has won the attention of commercial banks, enterprises and insurance companies. To make the financing mode accepted by all participants, proper credit risk assessment should be attached with importance and run through its implementation.[1]
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
