Trade Credit
Arrangement to purchase goods/services on credit; payment due later (typically 30-90 days).
Real World
Tesco negotiates 60-day trade credit with its suppliers, meaning it can sell goods to customers and collect revenue before it has to pay its suppliers — effectively using supplier money to fund operations.
Exam Focus
When asked about working capital, always explain how trade credit delays cash outflows, not just that it is 'free finance'.
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