Multilateral Obligation Set-off
Left: an invoice loop with three participants; the simplest opportunity for multilateral obligation set-off. Centre: when multilateral set-off is performed, the smallest invoice amount (in this case £800 due from Silvia to Sarah) can be deducted around the loop. Right: all participants in the loop now have reduced debt (with the smallest invoice completely cleared), reducing their working capital requirements and resolving the potential gridlock had any of them been unable to pay on time.
Incredible new research: how small businesses can be saved post-Covid, Dave Darby, lowimpact.org.
Credit clearing - introduction, Tom Woodroof, lowimpact.org.
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Fleischman, T. and Dini, P., Mathematical Foundations for Balancing the Payment System in the Trade Credit Market, Journal of Risk and Financial Management, 2021.
Božić, M. and Zrnc, J., The Trade Credit Clearinghouse: Liquidity and Coordination, 2021.
Iosifidis, G. et al., Cyclic motifs in the Sardex monetary network, Nature Human Behaviour, 2018.
Intrum, European Payment Report 2022.