Reverse factoring and its adoption feasibility in developing countries, a case study in Vietnam

Abstract

Being considered as a triple-win proposal for the supplier, buyer and also the banker, reverse factoring has been widely used in developed countries. However, it has not been the case in developing countries. Due to this primary difference, previous research conducted in developed countries can not fulfill the development need of the emerging markets, so it is necessary to have a tailor-made model for developing countries only. The paper provides a full-description of reverse factoring concept by combining supply chain management approach and the financial management perspective. Base on this multi-aspect approach and the participation of five among top ten biggest retail supply chains operating in Vietnam, the author constructs a measure to identify which factors might impact the domestic reverse factoring (D-RF) adoption intention of local firms and how collaborative and economic benefits factors influence the adoption decision, in particular. The paper presents a closer look for the status-quo of reverse factoring in Vietnam, a developing country, and also provides empirical evidence for previous papers in the related topic. Making reverse factoring become a more familiar method to enterprises and bankers in developing countries might be a long journey, this research is the first step to be made by firstly investigating the feasibility of D-RF as a supply chain financing method in those lands.