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.