Trade Credit

Trade credit is a flexible financing arrangement where a seller allows a buyer to purchase goods or services and pay for them later, often within a specified period (such as 30 or 60 days). It helps businesses manage cash flow by delaying payments without immediately exchanging money. Essentially, the seller extends credit to the buyer, trusting that the payment will be made on time. This practice fosters stronger business relationships and supports ongoing transactions, making it a common and valuable component of commercial trade.