4
Another possible solution to the short term cash flow
problem is to try to find ways of delaying payments to suppliers. To achieve
this, a business will try to discuss trade credit terms with its suppliers.
When trade credit terms can be
arranged, the business can order materials from suppliers and perhaps process
them into finished goods for sale before it has to pay for them.
The
major advantage of trade credit is that it is interest free. Some
suppliers who give trade credit will also offer cash discounts to
buyers who pay early.
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