The process of accounts receivable financing can be divided into the following steps. Firstly, a procurement agreement is signed between upstream enterprises and core enterprises in the supply chain, which stipulates that the upstream enterprise will provide goods to the core enterprise, and the core enterprise will make payment within a certain time (accounting period) after receiving the goods. Therefore, a sum of accounts receivable from upstream enterprises to core enterprises is formed. Afterwards, upstream enterprises apply for financing from banks and other financial institutions as financing sources, and transfer or pledge their accounts receivable from core enterprises to financial institutions as repayment guarantees and guarantees. Then, the core enterprise delivers the supporting documents related to accounts receivable to financial institutions and makes repayment/repurchase commitments. Finally, financial institutions issue financing funds to upstream enterprises based on their judgment of the authenticity of the transaction background between upstream enterprises and core enterprises and the credit rating of core enterprises

From the perspective of financing methods, accounts receivable financing can be divided into three categories: accounts receivable collateral financing; Transfer of accounts receivable; And accounts receivable securitization. The main difference between these three methods is the change of creditor's rights.

2、 Types and advantages of accounts receivable financing products

The main types of accounts receivable financing products in the domestic supply chain finance market today include: domestic factoring; Domestic hidden factoring; Domestic factoring pool financing; Bill pool credit; Export accounts receivable pool financing; There are six types of credit under export credit insurance. This article will focus on two main products for financing domestic small and medium-sized enterprises: domestic factoring and domestic factoring pool financing.

（1） Domestic factoring

Domestic factoring refers to the comprehensive financial services provided by a bank to a domestic seller (customer) for the sale of goods or services to another buyer in China, including accounts receivable account management, accounts receivable financing, accounts receivable collection, and assuming bad debt risks. If the transfer of accounts receivable is notified to the buyer and confirmed by the buyer, it is called factoring. Domestic factoring is usually aimed at small and medium-sized enterprise suppliers in the upstream of the supply chain, and is an important way to solve the financing difficulties of small and medium-sized enterprises.

（2） Domestic factoring pool financing

Domestic factoring pool financing refers to the one-time transfer of accounts receivable from one or more domestic buyers with different terms and amounts to a bank, and the bank provides financing based on the accumulated balance of accounts receivable. This product is suitable for small and medium-sized enterprises with good transaction records and relatively stable accounts receivable balances. The goal of factoring pool financing is usually to obtain low-cost financing from banks, but due to the dispersed buyer enterprise objects, frequency of occurrence, and inconsistent terms, it is too cumbersome to separately finance each accounts receivable. Therefore, factoring pool financing is an effective means to solve the efficiency of recovering scattered transaction funds.

3、 Accounts Receivable Financing Risks and Credit Management

The supply chain finance model is fundamentally established to address the financing difficulties faced by small and medium-sized enterprises. So the main risk of any financing approach under the supply chain finance model revolves around the insufficient credit information or qualifications of small and medium-sized enterprises themselves. On the other hand, accounts receivable financing is essentially a credit financing method, so the most important risks faced by this financing model belong to the scope of credit risk.

Therefore, the credit risk and identification methods for accounts receivable financing mainly include:

（1） Insufficient information disclosure

The internal management system of small and medium-sized enterprises is not standardized; The financial system is not sound; Moreover, there is a widespread problem of non-standard taxation. Due to insufficient information disclosure, banks are unable to use methods to measure the credit of core enterprises to measure the credit of small and medium-sized enterprises. According to the analysis of the book "Principles of Dagong Credit Rating", establishing a sound supply chain finance access system is the primary task for the development of supply chain finance. Through the admission system, enterprises with less contact with core enterprises or more default records can be excluded from the supply chain finance system. The establishment process of this system first involves analyzing the past cooperation patterns and records between core enterprises and small and medium-sized enterprises, and then being formulated or assisted by credit management agencies