The 2020 Mid-Year Economic Update_long

Trade Credit Grows in Importance

As banks have cut back on lending to businesses - especially small business - the role of trade credit has become more important to the channel. This article explores how distributors are balancing the risk of economic uncertainty with the need to use trade credit to grow sales.

Having up to 90 percent of a company’s customers reliant on distributor financing is not uncommon in the wholesale distribution space.

“Around the world, as commercial lenders have cut back on lending money to business, we’ve seen companies step forward to make up that gap,” says Abe WalkingBear Sanchez, founder and president of A/R Management Group, a consulting firm focused on cash flow management and credit sales.

In some sectors, such as those that serve construction end-markets, distributors have seen an even greater need these services from their customers.

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