The How, When And Why Of Extending Trade Credit
Source: American Express
Trade credit is the largest form of short term business financing. In a sense, it's peer to peer lending - businesses helping each other. Of course, it's not all altruistic, without trade credit, many of your customers wouldn't be able to buy from you. Yet, as in banking, not all customers should be treated equal. New businesses, those in troubled industries, highly leveraged companies, fast growing ones, and even huge well-known buyers like, say, the State of California, warrant tighter credit terms.