Which payment method allows a buyer to receive goods now and pay later, typically within 30, 60 or 90 days?

Which payment method allows a buyer to receive goods now and pay later, typically within 30, 60 or 90 days?

• A. Trade Credit (business to business)
• B. Fixed Rate of Interest
• C. Sale and Leaseback
• D. Cashflow

Answer: (A)

This question is about how suppliers allow buyers to pay after receiving goods, which is known as trade credit. In many business-to-business relationships, a supplier lets the buyer take the goods and delay payment for a set period—common terms are 30, 60, or 90 days. This arrangement helps the buyer manage working capital and cash flow because it frees up cash for a short time while still allowing essential purchases. If the buyer pays within the agreed term, there’s usually no interest; if they miss the deadline, charges or interest can apply. This is different from other terms: a fixed rate of interest relates to borrowing costs, sale and leaseback is about converting an asset into cash by selling and renting it back, and cashflow refers to the overall movement of money in and out of a business rather than a specific method of paying for goods.

This question is about how suppliers allow buyers to pay after receiving goods, which is known as trade credit. In many business-to-business relationships, a supplier lets the buyer take the goods and delay payment for a set period—common terms are 30, 60, or 90 days. This arrangement helps the buyer manage working capital and cash flow because it frees up cash for a short time while still allowing essential purchases. If the buyer pays within the agreed term, there’s usually no interest; if they miss the deadline, charges or interest can apply. This is different from other terms: a fixed rate of interest relates to borrowing costs, sale and leaseback is about converting an asset into cash by selling and renting it back, and cashflow refers to the overall movement of money in and out of a business rather than a specific method of paying for goods.