trade credit

• What is trade credit

  An agreement is made with suppliers to buy raw materials, components and stock which are paid for at a later date
• Advantages of trade credit

  Usually interest free - Can help with cash flow management

  Improves supplier relationship - using trade credit, businesses can build trust with their suppliers and strengthen their business relationships.
• disadvantages of trade credit

  expensive if payment date is missed

  Discounts for early payment will not be available