How important are supply chain collaborative factors in supply chain finance? A view of financial service providers in China

Abstract

Supply chain finance (SCF) aims to improve the overall creditability of the entire supply chain, including buyers, suppliers, and financial service providers, through an inter-organizational approach. In SCF, companies will collaborate with each other to maximise the mutual benefits. Companies, such as those involving suppliers, may sell their invoices to banks or any other financial service provider at a discount in order to cash in the invoices immediately for achieving better cash flow. Accordingly, the role of financial service providers becomes the most critical because they control the discount rates offered, while bearing all the risks, which is why they are also known as the risk takers. In existing literature and in practice, the discount rate is usually determined by the relationship between buyers and financial service providers. Therefore, it is necessary to understand what factors are considered during decision-making and whether the traditional collaborative factors considered in the literature on supply chain collaboration are still valid. So far, the supply chain collaborative factors have not been studied scientifically from the point of view of financial service providers. Therefore, in this work, we investigated how important these factors are for financial service providers. We identified the most important factors from the literature on supply chain collaboration and conducted interviews with many experienced practitioners in financial service industries in China. We employed interpretive structural modelling to model the relationship between collaborative factors and understand the importance of each factor. The results revealed that top management support, trust, and IT infrastructure are the factors considered the most important by financial service providers. Interestingly, we also found that incentives are the least important factors in SCF.