Question

Jerry is the owner of Tennessee's Treasures, a very successful framing and gift store. Suppliers are anxious to place inventory in Jerry's retail outlet. Some have offered to supply Jerry with their merchandise now, but will not require Jerry to send a payment for up to 60 days. These suppliers are allowing Jerry to take advantage of _______ credit.

Answer 1

Answer:

Trade credit

Explanation:

Trade credit is an agreement between two businesses where the supplier agrees to supply goods to a trader and collect payments later. There is no payment at the delivery of the products, but the supplier allows for later payments.

Trade credit allows traders to sell the product at first, deduct profits from the revenue and pay the supplier later. Trade credit can harm a business if the credit aspect is expensive. Should the trader negotiate for good credit terms, then trade credit is a viable option for inventory purchases.