2 min read
What it means
Trade credit is when a supplier lets you pay 30, 60 or 90 days after receiving goods rather than upfront. It is effectively an interest-free short-term loan that funds part of your working capital. The days you take to pay suppliers are your creditor days, which offset the days customers take to pay you.
How to use it well
Use the full agreed terms to keep cash in the business, but never go beyond them — paying late damages relationships and can lose you the terms altogether. Balancing supplier terms against your debtor days is what shortens the cash conversion cycle. Where you need more room than suppliers give, a short-term facility bridges the rest.
What it means for you
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.
Frequently asked questions
Is trade credit really free?
Usually yes, if you pay within the agreed terms — the supplier charges no interest for the credit period. It becomes costly only if late payment triggers penalties, lost early-payment discounts or damaged supplier goodwill.
Should I always take the longest supplier terms?
Take the full agreed terms to preserve cash, but weigh any early-payment discount against the value of the extra days. And never stretch beyond the terms — the relationship and your future credit are worth more than a few days' cash.
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