Trade Credit Management Strategies in SMEs and the COVID-19 Pandemic—A Case of Poland

Grzegorz Zimon and Robert Dankiewicz
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Grzegorz Zimon: Department of Finance, Banking and Accountancy, The Faculty of Management, Rzeszow University of Technology, 35-959 Rzeszow, Poland
Robert Dankiewicz: Department of Finance, Banking and Accountancy, The Faculty of Management, Rzeszow University of Technology, 35-959 Rzeszow, Poland

Sustainability, 2020, vol. 12, issue 15, 1-16

Abstract: Every large or small enterprise needs to have financial liquidity and to be able to generate profits to develop. It is not important in which sector it operates, whether it is a private or public one, but profits and safety are two elements every enterprise is not able to function without. The low performance of these two measures can cause a number of difficulties for managers. To avoid this, leading companies, especially the smallest ones, should optimize the trade credit management policy. Most often, SMEs’ (small and medium-sized enterprises) owners try to work together as part of a group purchasing organization, which positively affects trade credit management. The aim of the paper is to present the trade credit management strategy in Polish group purchasing organizations during the COVID-19 pandemic. The study uses data on the construction sector because it is one of the most important segments of the Polish economy, which is financed to a large extent with trade credit. The paper indicates the mechanisms whose applications allowed SMEs operating in purchasing groups to change trade credit management strategies in such a way that these units could operate calmly and safely in the market. These changes could be observed in purchasing goods with a large reserve, strictly controlling all receivables, switching to cash sales or limiting sales on long-term trade credit. The analysis showed that enterprises changed trade credit management strategies from moderately conservative to highly conservative.

Keywords: financial liquidity; trade credit; SMEs; group purchasing organizations; sustainability; Poland (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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