Study On Financing Motivation And Effect Of Accounts Receivable Securitization

Influenced by the policies,SMEs in China are faced with considerable challenges in financing.Combined with the current financing environment and the advantages of accounts receivable securitization(ARS),many enterprises have taken accounts receivable securitization as an effective method to solve the financing difficulties.Therefore,it is significant to study why enterprises carry out ARS,and the financing effect after the implementation of securitization.As one of the top companies in the construction decoration industry,Guangtian Group took the lead in proposing the ARS to solve the financing problem.This thesis analyzes the motivation of the implementation of ARS in Guangtian Group from two aspects,accounts receivable management and financing demand.It is found that Guangtian Group has created new financing method but hasn’t reduced the cost,the financial effect is enhanced but not in the long term,and the growth of free cash flow is promoted but the risk transfer is not effective.In further study,it finds that there are mainly three aspects that lead to it.The quality of basic assets is not high,the process design is unreasonable,and the scale of accounts receivable securitization is relatively small.Due to the three above reasons,the ARS of Guangtian Group did not achieve the best effect.Finally,the thesis puts forward three suggestions on how to improve the ARS: carefully select basic assets,improve the design of ARS,and rationally expand the scale of securitization.