Types of US trade credit


Types of US trade credit

The types of commercial credit are many, but before getting to know them, let us know the trade credit. It is a short-term agreement in which the supplier is granted to the buyer when the latter purchases goods for the purpose of reselling them. It is different from long-term credit, consumer credit, or installment sales. It also plays a role Important in financing many projects, especially those that cannot easily use other sources.


What are the most important types of US trade credit?

In the lines we follow the types of US trade credit:


Monthly Payment:

It is the most common type of commercial credit, as it is used in some aspects of commercial activity in which there are multiple operations, meaning that the supplier ships orders to the buyer during one month, and here the process becomes uneconomic if we want to track the cash discount for each invoice, and therefore we find in such cases The buyer can make the payment once a month.


Seasonal Payment:

Under this method of trade credit, the supplier issues an invoice with a date later than the date of shipment of goods, in order to encourage the buyer to send his request for seasonal goods before the sales season, so that the supplier can judge the market and organize production as much as possible.


Monetary terms:

Although this type requires cash payment, it involves the granting of credit but for a few days, and monetary terms, despite their many forms, generally mean that the buyer is given a short period starting from the date of issuing the invoice, and the purpose of this period is to enable him to review the invoice and check the goods received.


Normal conditions:

These conditions stipulate that the buyer is given a period of time from the date of issuing the invoice in order to submit the payment, and if he pays within a short period of time within the granted period, he will receive a discount to expedite the payment, and this short period covers the shipping period and gives the buyer an opportunity to inspect the goods and review them with the invoice before payment.


Finally, we may find there are some other types of commercial credit that are not considered credit in the full sense, due to the great risks, such as payment in cash before receipt or payment upon receipt, because the supplier in this case does not know anything about the customer, or that the reputation of the customer is not Therefore, the seller will not ship the goods until after receiving their value.

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