Trade Credit
Trade credit is the financing a supplier extends to a buyer by allowing payment after delivery, enabling the buyer to obtain goods before paying for them.
Trade credit is one of the most common forms of short-term business finance. By letting buyers pay on terms rather than upfront, suppliers help customers bridge the gap between receiving goods and generating revenue from them — supporting sales while creating a receivable for the supplier.
For buyers, trade credit preserves working capital and supports growth. On marketplaces, trade credit can be provided centrally to approved businesses across all their purchases, replacing the need to negotiate credit with each individual supplier.
Frequently asked questions
- What is trade credit?
- Trade credit is financing a supplier provides by letting a buyer pay after delivery, so the buyer can obtain and use goods before paying for them.
- Why is trade credit useful for buyers?
- It preserves working capital and bridges the gap between receiving goods and earning revenue from them, supporting cash flow and growth.
Related terms
Credit Terms
Credit terms are the conditions under which a supplier allows a buyer to pay for goods after delivery, rather than upfront — for example, payment within 30 days.
Read definitionTrade Financing
Trade financing is the range of financial products that help businesses fund the gap between buying goods and getting paid, easing cash flow across the supply chain.
Read definitionWorking Capital
Working capital is the money a business has available for day-to-day operations, calculated as current assets minus current liabilities.
Read definitionGo deeper
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