Home / Current Issue / Paper 1722335
Credit-to-Cash Optimization for Micro-Distributors: Applying Invoice Aging and Buyer-Risk Signals to Reduce Days Sales Outstanding
Subject area: Management and Commerce · Area of research: Accounting and Auditing
DOI: https://doi.org/10.64388/IREV10I2-1722335
Abstract
Micro-distributors and independent retail intermediaries routinely extend trade credit while operating with thin margins, volatile replenishment cycles and limited finance-automation capacity. The resulting accounts-receivable exposure increases Days Sales Outstanding (DSO), constrains inventory replenishment and weakens supplier confidence. This paper develops and tests a lightweight credit-to-cash framework that combines invoice-aging structure, customer payment history, buyer-risk segmentation and transaction-level ERP signals to forecast late-payment risk and prioritise collections. Using a public Kaggle invoice-payment benchmark as the empirical frame, and a reproducible 26,000-invoice analytical panel reflecting the observable variables normally available in small ERP and point-of-sale environments, the study compares logistic regression, random forest and gradient-boosted classification models for late-payment prediction, and ridge, random forest and gradient-boosted regression models for delay-duration estimation. The best classifier produced a ROC-AUC of 0.804 and PR-AUC of 0.526, while the best delay-duration model delivered an MAE of 7.77 days. Heat-map diagnostics reveal that aging status alone is insufficient; late-payment probability escalates sharply where aged invoices intersect with weak buyer credit tiers, high credit utilisation, prior payment lateness and dispute flags. A targeted intervention simulation indicates that risk-prioritised early contact and selective incentive routing could reduce ledger-level DSO from 37.4 to 36.6 days, releasing approximately $0.25 million in working capital on the analysed ledger. The paper contributes an implementable, transparent and resource-light decision framework for micro-distributors that cannot absorb enterprise-grade treasury systems but still require disciplined receivables governance.
Keywords
accounts receivable; invoice aging; days sales outstanding; credit-to-cash; micro-distributors; machine learning; working capital; ERP analytics; supply-chain finance.
How to cite this paper
@article{1722335,
author = {John Dima, Watson Jameson Muponda, Lisa Tsveta, Ashley Munashe Shambare, Munashe Naphtali Mupa},
title = {Credit-to-Cash Optimization for Micro-Distributors: Applying Invoice Aging and Buyer-Risk Signals to Reduce Days Sales Outstanding},
journal = {Iconic Research And Engineering Journals},
year = {2026},
volume = {10},
number = {2},
pages = {2000-2010},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1722335.pdf},
abstract = {Micro-distributors and independent retail intermediaries routinely extend trade credit while operating with thin margins, volatile replenishment cycles and limited finance-automation capacity. The resulting accounts-receivable exposure increases Days Sales Outstanding (DSO), constrains inventory replenishment and weakens supplier confidence. This paper develops and tests a lightweight credit-to-cash framework that combines invoice-aging structure, customer payment history, buyer-risk segmentation and transaction-level ERP signals to forecast late-payment risk and prioritise collections. Using a public Kaggle invoice-payment benchmark as the empirical frame, and a reproducible 26,000-invoice analytical panel reflecting the observable variables normally available in small ERP and point-of-sale environments, the study compares logistic regression, random forest and gradient-boosted classification models for late-payment prediction, and ridge, random forest and gradient-boosted regression models for delay-duration estimation. The best classifier produced a ROC-AUC of 0.804 and PR-AUC of 0.526, while the best delay-duration model delivered an MAE of 7.77 days. Heat-map diagnostics reveal that aging status alone is insufficient; late-payment probability escalates sharply where aged invoices intersect with weak buyer credit tiers, high credit utilisation, prior payment lateness and dispute flags. A targeted intervention simulation indicates that risk-prioritised early contact and selective incentive routing could reduce ledger-level DSO from 37.4 to 36.6 days, releasing approximately $0.25 million in working capital on the analysed ledger. The paper contributes an implementable, transparent and resource-light decision framework for micro-distributors that cannot absorb enterprise-grade treasury systems but still require disciplined receivables governance.},
keywords = {accounts receivable; invoice aging; days sales outstanding; credit-to-cash; micro-distributors; machine learning; working capital; ERP analytics; supply-chain finance.},
month = {August},
doi = {https://doi.org/10.64388/IREV10I2-1722335}
}