The secret life of UK trade credit supply: Setting a new research agenda

Abstract Trade credit management represents an important strategic opportunity for firms to enhance performance, liquidity and profitability. This paper synthesises existing understandings of trade credit, with particular (but not exclusive) reference to the UK, with a view to identifying a research agenda in this field. The size, macroeconomic significance, absence of regulation and presence of significant internal risk associated with trade credit suggest that such an enhanced meta-level understanding of this substantial financial market that shadows regular business-to-business operations is imperative. The paper synthesises what is known about the basic parameters of trade credit operations, suppliers’ motivations and imperatives for granting credit to trade customers and the factors that determine credit periods and terms. We identify where further research would advance understanding in this area.

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