Trade Credit

Trade credit represents a flexible payment financing option enabling business customers to make purchases now and pay invoices later based on negotiated terms. Extending credit facilitates business-to-business sales versus requiring prepayment.

Offering trade credit requires thorough vetting and risk analysis to minimize defaults. However, its convenience incentivizes purchases and enables scaling growth before achieving scale. Technology platforms help automate account management to optimize cash flow.

Sales teams should gain proficiency at discussing payment options during negotiations. Justifying creditworthiness while accommodating customer preferences increases deal values. Overall, trade credit provides business benefits but only with active collection diligence. Poor receivables management erodes any upside.