MANAGEMENT

Detailed explanation-1: -Key Takeaways. Trade credit is a type of commercial financing in which a customer is allowed to purchase goods or services and pay the supplier at a later scheduled date. Trade credit can be a good way for businesses to free up cash flow and finance short-term growth.

Detailed explanation-2: -Granting credit to your customer means you must wait before you have cash in your hand that you can use to make more sales. It also means that you can stay competitive. Other companies in your industry may offer credit terms to their customers, so it may be beneficial for you to do the same.

Detailed explanation-3: -Offering credit to customers indicates that you respect and trust them to pay their bills before their due dates. Customers will reward these gestures of confidence by continuing to buy from you. They will feel a degree of loyalty, and they like to do business with someone who trusts them.

Detailed explanation-4: -5.4. 1 What does “granting credit to someone” mean? To grant credit to someone is to trust that person and to take a risk in handing over a sum of money or goods, on the undertaking that the sum of money or goods will be repaid by a certain date plus an additional amount (of money or goods), called interest.