A Qualitative Approach to Trade Credit in Business Organisations

Dariusz Nowak and Sławomir Gorczynski
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Dariusz Nowak: Poznan University of Economics
Sławomir Gorczynski: Account Office - Konto

Business Management, 2020, issue 1 Year 2020, 25-41

Abstract: The aim of the paper is to present, in the cognitive aspect, the opinions, judgements and notions of entrepreneurs regarding financing of the current activity of enterprises with trade credit. The nature of the research problem determines the adoption of qualitative research as a research basis, in which direct interview with entrepreneurs has been used. These entrepreneurs, in transaction processes, represent both credit recipients as well as credit donors. Interviews were conducted in 2015, on a sample of 147 manufacturing companies of different nature and different business domain. The paper presents both positive, as well as negative aspects related to the use of trade credit. The possibility to purchase without having financial means, improving financial liquidity and production productivity; increase in revenue and competitive position and general use, open access and cheapness are particularly important in the first approach. Payment gridlock and high risk of activity, as well as increase in the cost in business activity were indicated in negative terms. Value - the authors try, through the prism of empirical research, to show and estimate positive and negative aspects of trade credit. This knowledge has a practical value as it could be used by other firms that implement or develop their trade credit policy.

Keywords: trade credit; financial liquidity; current activity financing; positive and negative aspects of trade credit (search for similar items in EconPapers)
JEL-codes: E50 (search for similar items in EconPapers)
Date: 2020
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