What are the merits and demerits …
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Posted by Piyush Jain 6 years, 11 months ago
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Gaurav Seth 6 years, 11 months ago
Advantages of Trade Credit:
The advantages of trade credits are:
1. It is easy and automatic source of short-term finance.
2. It reduces the capital requirement.
3. It helps the business focus on core activities.
4. It does not require any negotiation or formal agreement.
Disadvantages of Trade Credit:
Like other sources of finance, trade credit is also associated with certain disadvantages, which are as follows:
i. Trade credit is available only to those companies that have a good track record of repayment in the past.
ii. For a new business, it is very difficult to finance working capital through trade credit.
iii. It is very expensive, if payment is not made on the due date.
3Thank You