Trade credit

Definition

Trade credit is a type of short-term financing where suppliers allow businesses to purchase goods or services on account, paying for them at a later date. It effectively enables companies to use the supplied goods or services to generate revenue before payment is due.

Related terms

Accounts Payable:

Money owed by a company to its creditors for goods and services purchased on credit.

Short: Term Financing - Loans or credit facilities intended to be repaid within a year, used by businesses for operational purposes.

Credit Terms: The terms that specify the timing and amount of payments between buyers and sellers when transactions are conducted on credit