Impediments to the adoption of reversed factoring for logistics service providers

In this chapter we discuss the main impediments to the adoption of reverse factoring (RF) by suppliers in the logistics services business. Although the usage of RF is ascending, empirical evidence on RF and its implementation, especially from the point of view of suppliers, is scarce. The project reported in this chapter provides in-depth insights from seven case studies based on 20 interviews. Employees representing different departments within seven logistics service providers (LSPs) were interviewed. Interviews were also conducted with shippers, financial service providers, industry associations and university experts. The LSPs included in our research are mainly SMEs. Our results show that the main impediments to adopting RF for LSPs result from a lack of knowledge of RF, obstacles related to the collaboration with buyers and inefficiencies in the payment process. This article clarifies the practical implications of adoption of RF for LSPs and suppliers in general. Our results show that LSPs need to improve their knowledge of RF and the quality and efficiency of their invoicing processes if they are to benefit from RF. Furthermore, this research shows a need to find solutions to lower the cost to buyers of onboarding suppliers, so that they can open up RF to more suppliers—not just those that are most significant strategically.