Supplier selection predicts payment relief amount and timing accurately
Ex Ante Estimation of Payable Relief and Compensation Timing for Supplier Selection
Social and Information Networks
Summary
Choosing suppliers affects how and when buyers get financial help with payments. The authors created a way to estimate in advance how much payment relief a buyer can expect and when it will likely happen. They tested their method on hundreds of thousands of invoices and found strong connections between predictions and actual payment relief received, especially within a month. The method can help businesses plan better by identifying which supplier relationships are likely to provide timely financial support. However, it is better at ranking opportunities than predicting exact payment dates.
supplier selectionpayment reliefpayable networkinvoiceCompensability Capacity AssessmentSpearman correlationfinancial circularityworking capitaltiming predictionpayment maturity
Authors
Peplluis Esteva de la Rosa, Amogh Desmukh
Abstract
Supplier selection affects not only operating performance but also the payable network entered by a new obligation. This paper develops the Compensability Capacity Assessment (CCA), an ex ante buyer-supplier measure of expected gross payable relief and its likely timing. CPM provides the bounded structural kernel; concave CCA variants add bilateral invoice capacity. The measure is tested on 749,952 analytical invoices issued during 2012-2023, using frozen nine-month histories and future weekly, monthly, quarterly, semester, and annual windows. Cycle-restricted and path-enabled clearing are independent outcome-generating environments used to validate the measure, not technologies compared by this study. Across seven fully observed quarters in 2022-2023, log-CCA has a median Spearman correlation of 0.638 with future integrated relief; persistent relations carry 93.5% of relief, and the highest-scoring relation captures 92.5% of buyer-specific best relief. Predictability remains positive from week to year, with quarterly recalibration providing the best operating balance between signal, coverage, and timeliness. A timing analysis shows that, across the two validation environments, 89-91% of attributed relief occurs within seven days of invoice issue and 94-96% within thirty days, on average about sixteen days before contractual maturity. Log-CCA correlates 0.564 with thirty-day relief and 0.566 with relief-days. Its highest quartile has a 96.5% median probability of thirty-day compensation, compared with 57.6% in the lowest quartile. Conditional waiting-time prediction is weaker, so CCA should rank timely compensation opportunity rather than forecast an exact payment date. The findings link supplier placement, financial circularity, and working-capital exposure while motivating deployment, causal testing, and quarterly drift monitoring.