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Payables finance, also known as reverse factoring or supply chain finance, is a form of trade finance arrangement that provides a supplier with the option to receive a buyer’s payables early while allowing the buyer to extend its payment due date. Its recent adoption of the blockchain technology has made the process more efficient and secure. In this paper, we study the supplier’s optimal cash management policy under such a “frictionless” payables finance arrangement, based on which we quantify the value of payables finance to the supplier and also determine the equilibrium payment term extension for the buyer. Our study provides theoretical support for the wide adoption of payables finance for small suppliers with poor credit ratings and tight cash constraints. Our model analysis also suggests that the adoption of the blockchain technology can offer greater value to such suppliers. The computational methods developed in the paper can be used as a means to evaluate the value of payables finance and the payment term extension, especially in a frictionless blockchain setting. Date & Time 20 August 2021 Zoom Meeting: https://cuhk.zoom.us/j/92075287541 Meeting ID: 920 7528 7541 (Passcode: 357053) Speaker(s) Prof. Li CHEN |