Research on Trade Credit of Chinese Enterprises from Perspective of Accounts Receivable Financing

Abstract

This paper studies the trade credit activity of Chinese enterprises from perspective of Accounts Receivable Financing. Based on the trade credit theory, this paper studies the accounts receivable and accounts payable caused by trade credit in Chinese enterprises from three aspects which are the stock of trade credit, the structure of trade by credit and the financing of trade credit. It is found that compared to SMEs, large state-owned enterprises are net occupiers of trade credit, which are reflected in book a large amount of accounts payable, corresponding to accounts receivable of their upstream suppliers. The research shows that the project of accounts receivable financing for core enterprises, such as large state-owned enterprises with higher credit, is helpful to solve the financing problem of enterprises in supply chain systematically. The result highlight the importance of account receivable financing in supply chain.