| Commentary

137 Trade credit

| Commentary

137 Trade credit

Another way to address the cash-flow problems caused by the gap before the business is paid for its goods or services is to negotiate a reasonably long credit period with its own suppliers. For example, in the case of a business manufacturing products, if the business does not have to pay the suppliers of the raw materials used to make a product until it is paid for that product by the buyer, then the cash-flow problem is eliminated or at least alleviated1.

This solution to the cash-flow problem has its limitations. There are certain of

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