What are trade credits?

Question

What are the sources of short term capital?

Answer 1

trade credit is a short term liability created between a company and its customer.

ex. a widget factory sends the widget store a bunch of widgets, but the store doesn't have to pay for the widgets until the end of the month. the factory has an asset, trade receivables, and the store has a short-term liability, accounts payable. for the store, it's a source of short term capital, since they get a short loan for the widgets.