Question

____________ is when suppliers allow a business to take possession of needed goods and pay for them at a later date or in installments. Group of answer choices Collateral A mortgage Trade credit Bartering

Answer 1

Trade credit

Small firms may be able to get finance in the form of trade credit from their suppliers. Suppliers enable the company to obtain the products and services it requires and pay for them later or in installments.

What is the meaning of trade credit?

A business-to-business (B2B) agreement known as trade credit allows customers to make purchases of goods without paying in cash upfront and to make payments to suppliers at a later date. Businesses that use trade credits typically give customers 30, 60, or 90 days to make payment, with the transaction being documented by an invoice.

Trade credit can be compared to a form of 0% financing because it increases an organization's assets while deferring payment for a certain amount of products or services to the future and requires no interest payments throughout the repayment period.

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