Supplier credit arises when a seller allows the buyer to pay after goods or services are delivered. The supplier finances the payment period directly, sometimes supported by insurance, a guarantee or receivables finance.
How does Supplier Credit work in practice?
The supplier delivers before receiving full payment and allows the buyer to pay on an agreed future date or schedule. The invoice, contract or separate credit agreement sets the amount, currency, maturity and any interest or security. The supplier carries the buyer’s payment risk unless that exposure is insured, guaranteed, assigned or otherwise financed.
What the file should show
Keep the contract, credit limit, invoice, delivery evidence, due date, aging, collections and any security or insurance.
What does Supplier Credit not establish?
The supplier carries the funding and buyer-credit burden until payment, even if the sale has already been recognized commercially.
