Core Viewpoint - The article discusses the reverse supply chain ABN (Asset-Backed Notes) financing model based on accounts payable, highlighting its participants, transaction process, and unique advantages, which effectively address supply chain funding issues and provide new financing avenues for companies within the supply chain [1][2]. Participants and Their Roles - **Suppliers**: Positioned upstream in the supply chain, suppliers sell goods or services to debtors, creating accounts receivable. In the reverse supply chain ABN model, suppliers transfer accounts receivable to the initiating institution (e.g., factoring company) to obtain funds early, improving cash flow and reducing collection risks [3]. - **Debtors (City Investment Companies or Subsidiaries)**: As the party responsible for accounts payable, debtors issue a "Payment Confirmation" to clarify payment obligations. Their stable payment capability is crucial for the smooth operation of this financing model [4]. - **Initiating Institutions/Asset Service Institutions (e.g., Factoring Companies)**: These companies acquire accounts receivable from suppliers and manage the underlying assets, including tracking and collection, ensuring timely recovery of funds and protecting investors' interests [5]. - **Co-Debtors (if applicable)**: They provide joint payment commitments to enhance repayment guarantees, reducing credit risk and increasing market acceptance of asset-backed notes [6]. - **Guarantors**: They provide guarantees for the debtor's payment obligations, assuming responsibility if the debtor fails to pay on time, thus offering additional credit support for the asset-backed notes [7]. - **Lead Underwriters**: Responsible for underwriting the asset-backed notes, organizing issuance and sales, and coordinating relationships among parties to ensure smooth issuance [8]. - **Issuing Vehicle Management Institutions (e.g., Trust Companies)**: They establish asset-backed note trusts, packaging accounts receivable into asset-backed notes to achieve risk isolation and protect investors' rights [9]. - **Custodian Banks**: They oversee the special plan funds, ensuring the safety and compliance of fund usage, and preventing fund misappropriation [10]. - **Investors**: By purchasing asset-backed notes, investors provide funding for the special plan, sharing in the returns from accounts receivable recovery based on their risk preferences and return expectations [10]. Transaction Process - **Formation and Transfer of Accounts Receivable**: Suppliers sell goods or services to debtors, creating accounts receivable, which are then transferred to the factoring company for payment [11]. - **Establishment of Special Plans and Trust Construction**: The issuing vehicle management institution sets up an asset-backed note trust, injecting the acquired accounts receivable as underlying assets into the trust, while the lead underwriter organizes the issuance of asset-backed notes [12]. - **Fundraising and Utilization**: Investors subscribe to the asset-backed notes, with funds entering the trust account and being allocated as agreed for purchasing debt rights, facilitating fund flow and allocation [13]. - **Accounts Receivable Recovery and Profit Distribution**: Debtors pay amounts to the trust account as per the "Payment Confirmation," with the custodian bank distributing principal and profits to investors after deducting necessary fees [14]. Advantages of the Model - **Optimized Supplier Cash Flow**: Suppliers can quickly recover funds by transferring accounts receivable, improving cash flow and operational capacity [15]. - **Enhanced Debtor Creditworthiness**: The involvement of co-debtors and guarantors provides multiple guarantees for accounts payable repayment, enhancing debtor credit ratings and reducing investor risks [15]. - **Diversified Financing Channels**: This model offers a new financing method for companies in the supply chain, particularly benefiting small and medium-sized suppliers by addressing financing difficulties and costs [16]. - **Risk Isolation and Independent Operation**: The trust structure achieves risk isolation for underlying assets, ensuring their independence and security, thereby better protecting investors' rights [17]. Conclusion - The reverse supply chain ABN financing model based on accounts payable is an innovative and efficient financial solution that facilitates effective allocation of supply chain funds and reasonable risk control through collaboration among participants and well-designed transaction structures. This model is expected to find broader applications in various supply chain scenarios, contributing significantly to the innovation and development of supply chain finance [19].