Question

Fill in the blanks with appropriate words in the following statements.
'The suppliers of goods raise credit from the buyers,' it is called __________.

Answer 1

Trade credit refers to the type of finance raised when goods are purchased in terms of a short credit by the buyer from its ultimate supplier under some written agreement. It also refers to an arrangement whereby a manufacturer is granted credit from the suppliers to allow their customer to pay their outstanding balance within a credit period. Generally, the duration of trade credit is three to six months and thus it is a short-term financing facility.