Test Trade receivables

QUESTION 1: WHAT IS MEANT BY TRADE CREDIT?

Trade credit is defined as the link between the customer and a company for the purpose of a purchase by deferring payment
Most companies use trade credit as a facility to acquire goods or services for their benefit without the need to have the capital to pay for them on the spot, and
A vote of confidence from the company to the client that allows to establish the commercial relationship in a relaxed but serious way
Today, commercial credit for both individuals and companies has become an advantage to promote the capitalized development that strengthens our consumer society

The bank is the largest credit facilitator anywhere in the world
The credit relationship is established with the bank and it is the bank that approves the type of commercial credit to the companies or business for its development
When we use credit as a form of payment, it constitutes a debt that we must repay as we earn income from our business over a pre-agreed period of time
The time determinant operates for the purpose of applying fees or penalties by accruing interest in favor of the bank

As we know, banks always need to have a guarantee for the money they lend to their clients, individuals or companies
In the case of commercial loans, the only guarantee is our own creditworthiness
The bank may approve the loan based on our business creditworthiness
They will hardly approve an amount that we cannot guarantee with our business, so an approximate amount is established according to our regular income

Sometimes we use a personal loan to cover our business expenses
It is necessary in this case to clarify that both commercial and personal loans have different characteristics in terms of their legal terms and therefore contain different information
The personal credit score ranges from three hundred to nine hundred, while commercial loans have a score between zero and one hundred
One of the factors that determine credit scoring by lenders is payment history, whether we have been delinquent on payments, debts or the size of our business

A credit report is the part that contains the proper description of our business as well as its more detailed information and identifies us as a business entity once our llc is formed
It is important to keep it distinct from us as a person, therefore we must incorporate the registered legal name of our business
The information usually includes the company's location and branches as well as business contacts, type of business as well as the personnel in charge
The most relevant data to apply for a commercial loan that needs to be reported are financials, average profit estimates, our sales, and even our taxes

The relationship we establish with our main suppliers is the factor that also provides information for our credit report, defining a commercial line
In this way, our suppliers also have a record of the commercial operations we carry out with them
Although our suppliers are not required to provide our information to the credit bureaus, it may be decisive for our reliability in providing any type of information to the credit bureaus
The idea is to clarify the legality of our operations in order to obtain a good credit score