FAQ

What Should Businesses Consider When Extending Trade Credit?

When extending trade credit, businesses should consider both the upsides and the downsides. Though some accounts will be paid late or go uncollected, you can still extend trade credit effectively with the following tips:

  • Mitigate risks by getting credit insurance.
  • Offer early payment discounts to encourage customers to make on-time payments.
  • Invest in accounts receivable automation. Automating A/R reduces days sales outstanding and improves cash flow.
  • Take advantage of financed credit programs to free up working capital tied up in accounts receivable. Trade credit automation allows you to accept trade credit as a payment option, similar to “buy now pay later” plans for businesses.

To ensure you’re fully informed about extending credit to customers effectively, take a look at Apruve’s credit solutions.

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