Trade Credit
Keep your supply chain moving and your cashflow healthy
If your business relies heavily on suppliers for goods or materials, managing cashflow can sometimes feel like a balancing act. Trade credit gives you breathing space—allowing you to pay suppliers later while you keep operations running, generate income, and wait for customer invoices to be settled.
Put simply, trade credit is a short-term finance solution where a supplier provides goods or services upfront, and you agree to pay at a later date (usually 30, 60, or 90 days). It’s one of the oldest and most widely used forms of business finance—around 80–90% of world trade depends on it—and it underpins strong, long-term relationships between buyers and suppliers.
How Trade Credit Works
- Terms are agreed between buyer and supplier (often 30–90 days).
- The buyer receives goods or materials immediately, without upfront payment.
- The goods can be used, sold, or built into products, creating revenue before payment is due.
- Some suppliers incentivise early settlement with discounts, while buyers may negotiate extended terms during peak or seasonal demand.
In some cases, a third-party provider supports the agreement (using BNPL-style technology). They may charge a small fee (typically 2–8%) to add extra flexibility, reduce risk, and streamline payments.
What Trade Credit is Used For
Trade credit is effectively an interest-free, short-term loan in kind—you get the stock, parts, or raw materials your business needs, without draining working capital. It’s widely used for:
Industry Use Cases
Some sectors depend on trade credit more than others. For example:
Without trade credit, many businesses would need significant cash reserves just to operate.
If you are unsure, please give one of our helpful team a call
Advantages of Trade Credit
Trade Credit Insurance – How GIFCO Protects You
While trade credit offers major benefits, it also carries risk for suppliers if buyers delay payment or default altogether. That’s where trade credit insurance comes in.
At GIFCO, we use trade credit insurance to protect our clients against late or non-payment, giving peace of mind that cashflow won’t be derailed by insolvency or default. This means suppliers can extend credit with confidence, and buyers can access the flexibility they need—without either side taking on unnecessary risk.
