Supply chain finance (SCF) is an emerging phenomenon which allows firms to fund the organization through its supply chain relationships. This is achieved through a combination of shrinking inventories, collecting money from customers faster, and simultaneously delaying payments to suppliers. Utilizing Inventory Theory to illustrate the firm’s SCF benefits, our results demonstrate that inventory strategy changes have the largest and longest-lasting impacts on the firm’s financial performance. Interestingly, changing the firm’s payment terms result in only small, short-term effects. Based on our findings, we also offer suggestions to future research extensions in exploring the emerging field of supply chain finance.
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Huff et al. (2015) studied this question.
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