A Hoard of Unpaid Invoices: Dissecting Economies & Private Market Forces To Solve B2B Late Payments

The average small-to-medium-size business in the United States keeps just enough of a cash buffer to last 27 days worth of normal operational costs, but in 2016 81% of all B2B invoices were delayed at least 30 days or more past the due date of payment. Furthermore, in 2016, the average SMB held roughly $84,000 in unpaid accounts receivables, with that number also varying across industries. As an example, the average IT SMB held roughly$163k in unpaid accounts receivables, while the average transportation company held roughly $102k in the same. Yet we wonder why 50% of all SMBs close shop in under 5 years of their existence. Late business-to-business (B2B) payments are symbolic of rampant trade credit. The conditions surrounding the need, use, exploitation, and the legal protections to curb trade credit vary significantly across nations and business cultures. However, while cultural practices do have a way of impacting commerce, the various instances of late payments across the world have several other universal factors in common as well. In this paper, we take a look at some global economies and the particularities of practices influencing late payments within their borders. We then dissect their public policies in an effort to gauge the pressure points which they hope to address - as well as any noticeable impact such policies may have had on future payment practices. We then juxtapose our lessons from public policy against the impact of private market solutions and technologies aimed at resolving late payments, and use those contrasting images to better understand the various factors that may have been left unanswered in public policy. Finally, I use my experience dissecting and studying the impact of public legislation to craft and put forth policy proposals of my own - aimed at resolving the most common imbalances and exploits observed during the course of my study

CBAC – a model for conflict-based access control

Organisations that seek a competitive advantage cannot afford to compromise their brand reputation or expose it to disrepute. When employees leek information, it is not only the breach of confidentiality that is a problem, but it also causes a major brand reputation problem for the organisation. Any possible breach of confidentiality should be minimised by implementing adequate security within the organisation and among its employees. An important issue to address is the development of suitable access control models that are able to restrict access not only to unauthorised data sets, but also to unauthorised combinations of data sets. Within organisations such as banks, clients may exist that are in conflict with one another. This conflict results from the fact that clients are functioning in the same business domain and that their information should be shielded from one another because they are in competition for various reasons. When information on any of these conflicting clients is extracted from their data sets via a data-mining process and used to their detriment or to the benefit of the guilty party, this is considered a breach of confidentiality. In data-mining environments, access control usually strips the data of any identity so as to concentrate on tendencies and ensure that data cannot be traced back to a respondent. There is an active research field in data mining that focuses specifically on ‘preserving’ the privacy of the data during the data-mining process. However, this approach does not account for those situations when data mining needs to be performed to give answers to specific clients. In such cases, when the clients’ identity cannot be stripped, it is essential to minimise the chances of a possible breach of confidentiality. For this reason, this thesis investigated an environment where conflicting clients’ information can easily be gathered and used or sold, as to justify the inclusion of conflict management in the proposed access control model. This thesis presents the Conflict-based Access Control (CBAC) model. The model makes it possible to manage conflict on different levels of severity among the clients of an organisation – not only as specified by the clients, but also as calculated by the organisation. Both types of conflict have their own cut-off points when the conflict is considered to be of no value any longer. Finally, a proof-of-concept prototype illustrates that the incorporation of conflict management is a viable solution to the problem of access control as it minimises the chances of a breach of confidentialityThesis (PhD)--University of Pretoria, 2012.Computer Scienceunrestricte

Combining SOA and BPM Technologies for Cross-System Process Automation

This paper summarizes the results of an industry case study that introduced a cross-system business process automation solution based on a combination of SOA and BPM standard technologies (i.e., BPMN, BPEL, WSDL). Besides discussing major weaknesses of the existing, custom-built, solution and comparing them against experiences with the developed prototype, the paper presents a course of action for transforming the current solution into the proposed solution. This includes a general approach, consisting of four distinct steps, as well as specific action items that are to be performed for every step. The discussion also covers language and tool support and challenges arising from the transformation

Essays on Public Policy Evaluation: The Case of Spain's Supplier Payment Plan

The 2008-14 economic crisis significantly worsened Spain's public finances, leading to increased budget deficits and public debt, as well as longer payment periods to vendors. As a result, unpaid invoices by subnational governments peaked in December 2011 at €28.5 billion (2.7% of GDP). In response, the central government launched the Supplier Payment Plan (SPP) in 2012 to address these overdue payments. This dissertation evaluates the SPP, focusing on the causes of government arrears, the impact of delayed payments on corporations and procurement, and the role of politicians’ incentives in bailout agreements

Supply Chain Finance Adoption:Three is a Crowd in Entangled Relationships

Supply Chain Finance (SCF) has gained increasing attention in recent years – for both favourable reasons, e.g. the critical need for working capital during economic recovery, and adverse reasons, e.g. high-profile scandals and abuses of SCF reported in the media such as Greensill and Carillion. The SCF literature has primarily focused on the economic advantages of SCF, and a so-called win-win-win approach claiming that all the parties involved , e.g. the bank, buyer, and supplier, would all benefit from SCF arrangements. Even though previous research on the adoption of SCF has pointed to the reluctance of firms, especially suppliers, to adopt SCF, the literature has given most attention to large focal firms, placing less emphasis on their supply chain partners. Yet supplier reluctance is also important to these focal firms as the successful implementation of SCF is determined by the degree of participation and frequency of transactions with suppliers. This has produced a need to systemically understand how small, less powerful non-focal firms construct their understandings of SCF and make decisions about SCF participation. This thesis investigates the understandings of, and the decision to adopt, SCF primarily in SMEs, both upstream as suppliers and downstream as distributors, in two different settings ─ the UK, where SCF is relatively well developed, and Thailand where SCF recently started in 2016. Given the dissensus in the literature regarding the appropriate theoretical underpinnings, this study employs a grounded theory-based methodology in which no theory was committed to before data collection and analysis, allowing for a substantive theory of SCF relationships to emerge from the collected data. This involved 56 interviews with SMEs, banks and subject experts as well as analysis of supporting documents. Consistent with grounded theory, the study sought to identify the main concern of the research participants and the way in which they dealt with this identified main concern. Through a constant comparative analysis of interview data, supporting documents, and relevant literature, the emergent main concern or core category was identified as the ‘Dyadic - Triadic distinction’. This distinction was between dyadic forms of SCF, in which informants had relatively independent relationships in their physical and financial supply chains, and triadic forms, in which relationships were entangled in some way. Triadic forms appeared to be inherently problematic, leading to the thesis that ‘Three is a Crowd’. Participants dealt with this main concern through five interrelated categories of concern ─ Risk, Relationship, Awareness, Control, and Context. Following the emergence of the main concern or core category and the five interrelated categories, a systematic analysis was undertaken of how transaction cost economics (TCE), which was identified as the most appropriate formal theory, could and could not account for the findings. For example, many of the findings could be interpreted in terms of opportunism and information impactedness, but there were concerns with relationships and control that could not be explained by TCE. From this analysis a qualitative model of how SMEs understood and made decisions to adopt SCF was proposed. In addition, a more detailed model was developed to show the significance of signalling concerns in the findings. The main contribution of this thesis is to show how the firms often meant to be the primary beneficiaries of SCF – SMEs – are much less concerned with technical advantages (such as lower financing cost), and much more concerned with the relational consequences of participating in more complex triadic forms of SCF. The key practical implication that is drawn is that focal firms need to be aware, when offering triadic SCF to their smaller supply chain partners, that these partners often have existing dyadic SCF relationships. Therefore, their decision to adopt an offered triadic SCF is not straightforward, but involves participating in a new relationship and at the same time having to maintain or reduce existing ones ─ often including both financing and supply chain relationships

Essays on Banking and Financial Intermediation

This dissertation combines micro-level data and partial equilibrium models to understand how financial policies affect non-financial firms, with a particular focus on the role played by banks in such transmission. In the first chapter we study a large-scale intervention in the Brazilian banking sector characterized by a sudden increase in the supply of credit provided by commercial government banks. Theoretically, the effect of this type of policy is ambiguous: while it can increase the total amount of credit in the economy, it can also increase misallocation if government banks finance riskier firms with unproductive projects. We leverage credit registry data to document a series of empirical facts and test if the intervention alleviated inefficient underprovision of credit. We find that while the intervention led to a reduction in interest rates and to an increase in total credit from both government and private banks, government banks faced a significant increase in defaults. Loans to ex-ante indebted firms explain this increase in default for government banks. Moreover, neither the increase in total credit nor the reduction in interest rates had any observable effects on output or employment. Our results suggest that the intervention increased credit misallocation, and that adverse selection did not play a significant role in the allocation of credit in Brazil. In the second chapter, we assess the role of banks in the Paycheck Protection Program (PPP), a large and unprecedented small-business support program instituted as a response to the COVID-19 crisis in the United States. In 2020, the PPP administered more than $525 billion in loans and grants to small businesses through the banking system. First, we provide empirical evidence of heterogeneity in the allocation of PPP loans. Firms that were larger and less affected by the COVID-19 crisis received loans earlier, even in a within-bank analysis. Second, we develop a model of PPP allocation through banks that is consistent with the data. We show that research designs based on bank or regional shocks in PPP disbursement, common in the empirical literature, cannot directly identify the overall effect of the program. Bank targeting implies that these designs can, at best, recover the effect of the PPP on a set of firms that is endogenous, changes over time, and is systematically different from the overall set of firms that ultimately receive PPP loans. We propose and implement a model-based method to estimate the overall effect of the program and find that the PPP saved 7.5 million jobs. In the third chapter we further explore the Paycheck Protection Program (PPP) by asking what is the optimal allocation of funds across firms and the distortions caused by allocating these funds through banks. We show that it can be optimal to allocate funds to the least or most affected firms depending on the underlying distribution of the shock that firms face, the firms' financial position, and the total budget available for the program. In the model, as in the data, banks distort the allocation toward firms with more pre-pandemic debt and those less affected by the COVID-19 crisis. We characterize how this misallocation depends on the degree of asymmetric information between banks and the government. In an empirical application of our model, we estimate the PPP's effectiveness and compare it with alternative policies. A policy targeted at the smallest firms could have increased the program's effectiveness significantly