Corporate Credit

Corporate Credit is a contractual agreement in which a corporation receives something of value now and agrees to repay the lender at some later date. This is almost identical to personal credit except it is a business entity, instead of an actual person, that receives corporate credit from vendors. Corporate credit is the largest business-to-business form of capital and is a very important source of capital for most businesses. Trade credit, for most businesses, is much greater than the funding provided by banks, alternative funding sources, and investors.

Net terms refer to how long your business has to pay the balance of the invoice. If a trade credit vendor extends your net 30 days terms, that means you have 30 days to pay the full balance. Sometimes a corporate credit vendor will offer discounts if the balance is paid before the terms are up. A vendor might offer a 5% discount on the total invoice if the balance is paid within 20 days and perhaps a 10% discount if paid within 10 days. Basically, corporate credit allows businesses to collaborate in order to efficiently use their capital for different business goals.

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