Being a new research area, logistics finance solves the contradiction between banks and SMEs (small and medium enterprises) about financing; it is beneficial to financial market and logistics market development too. As a service innovation, it unites the interests of bank, 3PL (third-party logistics) providers, and SMEs and integrates material, finance, and information. Logistics finance has been developed in recent years in China, but the research is not enough on 3PL enterprises. On the background of that, the paper makes a research in the field of logistics finance with different pricing methods, based on the perspective of third-party logistics enterprises. This paper proposes a pricing model of inventory financing that can maximize the cash flow of 3PL enterprise, when the default rate of the small- and medium-sized enterprise is affected by the pledge price. And then this paper studies the model of inventory financing that can maximize the cash flow of enterprise under the condition of the existence of cash discount rate. The core factors affecting the loan-to-value ratio were established through analysis of mathematical model. We also consider the loan-to-value ratio of cash discount rate in the model. Results show that in the pledge of the known function and cash discount the price change can be calculated to meet enterprise cash flow lending rates and get biggest loan-to-value ratio.
At present, due to small- and medium-sized enterprises smaller scale in China, bank credit rating is low in accordance with bank mortgage lack of fixed assets and the risk control system is not perfect and so on, making them difficultly get bank financing, and the lack of funds is seriously restricting the development of small- and medium-sized enterprises. However, based on the 3PL inventory financing business can better play a role in the advantages of the supply chain for the new approach of the financing of the small- and medium-sized enterprises; it can effectively solve the financing difficult problem in small- and medium-sized enterprise. By participating in inventory financing business, the banks and the 3PL enterprise can get the new customer resources, broaden the profit way of the enterprises, and can obtain the effect of altogether wins. Because of the features of 3PL enterprise business, it is fully grasping the information of the pledge market supply and demand and the pledge of price fluctuations that can be helpful to the banks to eliminate the risk of inventory financing business caused by the information asymmetry.
Inventory financing refers to the enterprise which needs financing (debit), in order for business activities to obtain loans, provide the pledge of fixed value to the enterprise (financial institution) that provides financial capital, and transfer the pledge to the 3PL enterprise (mediator) which has the qualification of legal custody of the inventory. This is the 3PL enterprise participating in the movables mortgage business.
Domestic and foreign experts are mainly from two perspectives on the basis of the 3PL enterprise to participate in the inventory pledge financing research.
Chan et al. [
Wonglimpiyarat [
Zhang and Zhao [
In Meng’s study [
Although there is a lot of research around the world, providing a certain theoretical basis for the smooth development of inventory pledge business, most of the research is biased in favor of the logistics financing business model research and the bank based research, ignoring the third-party logistics enterprises in inventory financing related issues, such as loan-to-value ratios, loan period, and default rate of loan companies. In this paper, we study the problem of loan-to-value ratios in the inventory financing business under the 3PL enterprises. Taking full account of the loan-to-value ratios is closely related to factors; in practice, the 3PL enterprises rely on the experience of the valuation of the loan-to-value ratios, by building models, determining the 3PL enterprises in inventory financing and the maximum cash flow loan-to-value ratios, to ensure that the 3PL enterprise gains maximum profits.
Controllable risk, also known as the systemic risk, refers to the risks caused by improper operation, stealing, breach of contract, and so on in 3PL enterprises and financing enterprises. And the risk is called controllable risk, also known as unsystematic risk. This kind of risk and the entire logistics financial market have no systematic connection, but it can be through the establishment of strict inventory operation procedures, strict inventory control system and strict credit review procedures, and other means to reduce the controllable risk. Controllable risk mainly includes three aspects: 3PL enterprise’s supervision risk, credit risk, and legal risk [
There is a risk that is not controlled by banks, logistics enterprises, and financing enterprises, which is not controllable risk, also known as systemic risk. Such risks exist in the macroenvironment, no matter how the enterprise management will always exist, such as accident risk, natural disaster risk, and economic environment risk. Uncontrolled risk will lead to the whole economic and social unrest; people can not take a risk in advance of this risk to avoid or use targeted measures. In the research of this paper, the impact of the risk on the pricing of pledge is ignored. Therefore, the system risk also is not considered in this paper.
Loan-to-value ratio refers to the 3PL enterprises in the business of inventory financing provided by the loan amount and the ratio of initial assessment of value of the pledge. Loan-to-values ratios as the core of factors in the inventory financing business not only affect the expected return of third-party logistics enterprise, but also affect the 3PL enterprises risk control level. The main factors that affect the stock pledge rate are as follows.
Currently there are mainly four types of inventory financing: receipt pledge business, trust business supervision, unified credit business, and logistics bank business. Under the unified credit business model, this paper focuses on the discussion of the 3PL enterprise’s expected return and the optimal inventory loan-to-value ratios and so forth.
Unified credit financing business model is a kind of movable property mortgage credit business, which is different from the traditional movable property mortgage credit business. During inventory pledge, the pledge’s actual ownership belongs to the pledgee and its allocation of regulatory power belongs to the supervisor. That is to say, the inventory’s actual ownership belongs to the financial institution and its allocation of regulatory power belongs to the 3PL. During the period of pledge, when the pledge value is more than the contract minimum value (maximum value), financing companies more than the minimum value (highest value) can be partly free to deposit or withdraw; if the financing enterprises have production needs, they can replace the original pledge by prearranged methods. When the financing time limit is over, after these small and medium enterprises carry out their obligations under the provisions of pledge contract, the pledge’s ownership will be transferred to pledger. In the process of financing, the 3PL enterprises take inventory security guarantees.
Taking the 3PL enterprises as the research subject, there are two main research areas in the field of inventory pledge financing, the study of endogenous variable and the external variable of default. At the end of the inventory financing, the financing enterprise can return the loan to the real value of the goods and also depend on the credit; therefore, the inventory financing strategy is based on the external conditions to choose the right collateral rate and loan-to-value ratios. In order to reduce unnecessary computation, the model is as follows: The 3PL enterprise’s logistics warehousing expense ratio has nothing to do with the value of the pledge; it is the 3PL enterprise’s expense. The deposit rate is compounded. There is no systemic risk in the inventory financing. It is without considering the national tax. Inventory financing business is short term (within a year) financing business; it is assumed that the loan interest rate is unchanged during the period of the pledge.
Assuming that the final value of the pledge of the enterprise during the period of the loan is
The characteristic of this model is not considered a cash discount factor, and it is suitable for the financing enterprises which are not hedging in future market; the changes in the value of the inventory can bring big risks to finance (to establish a model of the process to provide a basic reference here temporarily not to consider the effects of other risk factors for financing). According to the above analysis, the main factor of the change of the value of the pledge is the main factor to establish the model as follows.
The final received capital and interest of 3PL enterprise is
① When borrowing enterprise to fulfill the pledge contract, 3PL enterprise’s flow of cash is
② When the borrower defaults, the 3PL enterprise’s flow of cash is
The expected cash flow of the loan companies is
Differentiating loan-to-value ratios on the function of cash flow in the 3PL enterprises, get the following results:
Simplification:
Because of the assumption of the single peak symmetric density function, the maximum of 3PL enterprises expected cash flow is
Borrowing enterprises in the accounts receivable may not be timely repayment but used in other ways; it will generate some of the other uncontrolled risks; in order to avoid the risk, the 3PL companies can consider joining the cash discount rate of this variable for motivation and timely repayment of financing enterprises.
Now assuming that the 3PL enterprises committed in
The flow of cash of the 3PL enterprises at different time is as follows.
When loan companies do not fulfill the pledge contract, the cash flow of 3PL enterprises is as follows:
The expected cash flow of the financing enterprises is
That is,
So,
Among them
Differentiating loan-to-value ratios on the function of cash flow in the 3PL enterprises, get the following results:
Because of the assumption that
Finally
At the beginning, the market value of small- and medium-sized enterprise’s inventory is 2.5 million, the loan is for 90 days, and according to the research, the value of inventory changes to meet
The actual situation of the 3PL enterprises in (
Let
Then
Solving
At last, we get the 3PL enterprise expected final maximum loan-to-value ratio of cash flow for
In order to see clearly how the variables influence the results, we make a sensitivity analysis in the end. In our paper,
The sensitivity analysis of
Percentage changes | −4.00% | −2.00% | Based point | 2.00% | 4.00% |
---|---|---|---|---|---|
| 69.26% | 71.26% | 73.26% | 75.26% | 77.26% |
| 24761.25 | 24696.58 | 24473.43 | 24312.37 | 24265.38 |
| −4.58% | −2.73% | — | 2.73% | 5.17% |
| 1.18% | 0.91% | — | −0.66% | −0.85% |
| −0.26 | −0.33 | — | −0.24 | −0.16 |
In recent years, inventory financing, as an innovative financial instrument, has developed rapidly in China. It can help us solve the problem caused by the occupation of a large amount of circulating fund. The pattern of inventory financing coordinates the benefits between core enterprise, bank, and middle- and small-sized enterprises effectively. At the same time, the storage enterprise also profits a lot in the participation of cargo storage business.
This paper proposes two novel models to solve the problem of 3PL enterprises: how to get a maximum loan-to-value ratio by different pricing methods. Firstly, we study that the 3PL enterprises participate in the inventory financing business. Secondly, we suppose the final value of small- and medium-sized enterprises is fit for normal probability function. Thirdly, this paper assumes that the default rate of small- and medium-sized enterprises related to the value of the pledge.
Moreover, we add the cash discount rate and other factors to establish the final of the 3PL enterprises pricing model. In the end, a case of 3PL enterprises study shows that when taking the loan interest rate of bank in short time and the risk compensation rate factors into consideration, we can get the optimum inventory financing cash flow best for 3PL enterprises from the two models in the paper. This paper can give 3PL enterprises some advice about how to take some measures of avoiding risks and how to get the optimal loan-to-value ratio.
The authors declare that there are no competing interests regarding the publication of this paper.
This research was supported by the National Natural Science Foundation Council of China under Project no. 71502159; the Applied Basic Research Science Foundation of Yunnan Provincial Department of Science and Technology under Project no. 2015FD028; the Science Foundation of Yunnan Provincial Department of Education under Project no. 2015Y269; and the Science and Technology Innovation Team Fund of Logistics Engineering in Colleges and Universities of Yunnan Province in China.