The impact of payment term extensions on the working capital management of an automotive supply chain
Chaorui Huang,
Felix T. S. Chan and
S. H. Chung
International Journal of Production Research, 2022, vol. 60, issue 24, 7360-7383
Abstract:
Substantial evidence has shown that payment delays generate negative effects on suppliers’ working capital level and thus can further affect the entire supply chain’s working capital efficiency and even result in bankruptcy for capital-constrained suppliers. The adoption of emerging solutions such as supply chain finance (SCF) is considered an innovative approach to deal with this issue. However, the current literature seldom considers the impact of payment term extensions on the supply chain’s working capital management (WCM) through the development of applicable SCF methods. Thus, motivated by how SCF can improve a supply chain’s WCM in the presence of payment delay, we establish a multi-cycle model and identify the conditions under which extended payments will impact on the supply chain’s collaborative cash to cash (CC2C) cycle and the shareholder-value added (SVA). Finally, the numerical analysis not only confirms the major findings of this paper but also provides some additional insights that can assist practitioners in mitigating the adverse effects caused by payment delays.
Date: 2022
References: Add references at CitEc
Citations:
Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2022.2065549 (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:60:y:2022:i:24:p:7360-7383
Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20
DOI: 10.1080/00207543.2022.2065549
Access Statistics for this article
International Journal of Production Research is currently edited by Professor A. Dolgui
More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().