Understanding Trade Credit

What is the primary benefit of using Trade Credit for a business?

• Ability to make a profit before paying for goods

• Long-term financing solution

• Immediate payment to suppliers

• Increased interest rates

In the convenience store example, how many days does the store have to pay the supplier after selling all the chocolate bars?

• 30 days

• 40 days

• 20 days

• 10 days

What is a potential risk if a business fails to pay its supplier on time?

• Higher profit margins

• Improved customer relations

• Loss of a critical supplier

• Increased sales

Which of the following is an advantage of Trade Credit?

• High interest rates

• Complex setup process

• Widely available across industries

• Immediate cash flow improvement

How might offering Trade Credit to customers negatively impact a business?

• Delayed customer payments

• Higher product costs

• Increased supplier trust

• Improved cash flow