Oracle Consigned Inventory - how to reconcile Payable to outstanding Receivable balance?

Seeking an option to apply Payable transaction to the customer's oustanding AR balance before considering payment for Customer Owned Consigned Inventory.

Requirement:  Pay-On-Use of Consigned inventory to offset existing AR balance; not payment to customer/Supplier

**Set-up

12.2.4

Consigned inventory is Customer Owned

Inventory identified as Pay-On-Use

**Question

1. does this require the Supplier to be set-up first and then the related customer?  (so that the Supplier is also seen as a customer within the same HZ account; two different uses)

     a.  Or can the customer account be added to the Supplier record

2.  How would an option to apply the payable record to the customer, if it can be done, affect the Autoinvoicing process?