Evaluating Investments in Accounts Receivable: A Wealth Maximizing Framework

Kim, Yong H.; Atkins, Joseph C.

doi:10.1111/j.1540-6261.1978.tb04857.x

Cited by 65 publications

(27 citation statements)

References 12 publications

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“…Fewings (1992) obtains closed-form solution for the value of granting credit and an upper bound on the acceptable default risk. Another series illustrates the nuances of correctly evaluating a credit policy (Atkins & Kim, 1977;Dyl, 1977;Kim & Atkins, 1978;Oh, 1976;Walia, 1977;Weston & Tuan, 1980). Nonetheless, this literature invariably assumes that inventory and/or procurement polices do not affect the trade credit decision.…”

Section: Research Questions and Literaturementioning

confidence: 99%

The price of reverse factoring: Financing rates vs. payment delays

Vliet

Reindorp

Fransoo

2015

European Journal of Operational Research

131

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a b s t r a c tReverse factoring-a financial arrangement where a corporation facilitates early payment of its trade credit obligations to suppliers-is increasingly popular in industry. Many firms use the scheme to induce their suppliers to grant them more lenient payment terms. By means of a periodic review base stock model that includes alternative sources of financing, we explore the following question: what extensions of payment terms allow the supplier to benefit from reverse factoring? We obtain solutions by means of simulation optimisation. We find that an extension of payment terms induces a non-linear financing cost for the supplier, beyond the opportunity cost of carrying additional receivables. Furthermore, we find that the size of the payment term extension that a supplier can accommodate depends on demand uncertainty and the cost structure of the supplier. Overall, our results show that the financial implications of an extension of payment terms need careful assessment in stochastic settings.

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Section: Research Questions and Literaturementioning

confidence: 99%

The price of reverse factoring: Financing rates vs. payment delays

Vliet

Reindorp

Fransoo

2015

European Journal of Operational Research

131

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“…Nadiri (1969) emphasizes the role of supplier financing by comparing trade credit to a capital investment that yields returns over time through gains in market share. Although Kim and Atkins (1978) and Hill (1981, 1983) demonstrate theoretically the impact of trade credit policies on suppliers' firm value, the literature lacks an empirical examination of this impact. This study seeks to fill this void by estimating the shareholder wealth effects of providing financing to customers.…”

mentioning

confidence: 99%

Shareholder Returns from Supplying Trade Credit

Hill¹,

Kelly²,

Lockhart³

2012

Financial Management

129

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We examine shareholder wealth implications of supplying financing to customers. Robust results suggest that excess returns and changes in trade receivables are directly and significantly related. Further evidence indicates the value of receivables is higher for suppliers with stronger motives relating to operating and contracting costs. The results also suggest a discounted value of receivables for financially unconstrained firms. Overall, we conclude that investors recognize trade credit as an effective instrument in mitigating frictions hindering sales growth. Thus, certain suppliers are positioned to derive increased strategic benefits from credit policy.

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“…np. Kim, Atkins 1978;Lieber, Orgler 1975;Merville, Tavis 1973;Arcelus, Srinivasan 1993]. Nurt empiryczny koncentruje się przede wszystkim na wyjaśnieniu podstaw, obserwowanych w obszarze zarządzania kapitałem obrotowym, zjawisk, np.…”

Section: Wstępunclassified

Inwestycje w operacyjny kapitał obrotowy netto w rachunku przepływów pieniężnych

Szpulak

2014

Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu

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Evaluating Investments in Accounts Receivable: A Wealth Maximizing Framework

Cited by 65 publications

References 12 publications

The price of reverse factoring: Financing rates vs. payment delays

The price of reverse factoring: Financing rates vs. payment delays

Shareholder Returns from Supplying Trade Credit

Inwestycje w operacyjny kapitał obrotowy netto w rachunku przepływów pieniężnych

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