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Highlight the disadvantages (limitations) of using Trade Credit.

Highlight the disadvantages (limitations) of using Trade Credit.

Answers

sharon
1.The debtor company will undergo the opportunity cost of the discount foregone by the very buying company.
2.This finance is not reliable because in the event of default on the buyer’s side the seller cannot give it and this way cut the buyer’s credit line which may lead a lot of inconveniences and in some cases stoppages in production or sales of the debtor.
3.It is usually restricted to working capital items and as such may not be available for fixed assets which are important for profitability reasons.
sharon kalunda answered the question on April 16, 2019 at 14:08

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