Empirical Evidence About Payment Term Extensions in the Reverse Factoring Context

Reverse factoring (RF) is a highly relevant form of supply chain finance. Whereas extant analytical studies indicate how RF should enable buyers to extend payment terms, sufficient empirical evidence is lacking. To hypothesize on payment term extensions, we study three motives—financing cost, fairness, and standardization. Our empirical evidence indicates the presence of all three. It extends former analytical work on RF adoption revolving around the financing cost motive only.