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- Terms of Sale: Examples
- Types of Credit: Consumer Credit; Bank Credit; Commercial Credit; B2B; Business to Business
- Written Credit Policy Manual
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- Do's and Don'ts of Business to Business Debt Collection, Debt Collection Practices
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- Advantages and Disadvantages of Purchasing Credit Insurance
- A Letter of Introduction
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Types of Credit: Consumer Credit; Bank Credit; Commercial Credit; B2B; Business to Business
Commercial Credit
Commercial credit is credit extended by a manufacturer or supplier when selling goods to a buyer for use in manufacturing or for resale. This is often referred to as business to business credit, or simply B2B credit extension. According to one reliable source, more than 10 billion B2B transactions occur in the United States annually.
Consumer Credit
Consumer credit involves credit extended to an individual or a family enabling them to obtain goods, services, or money for personal, family or household purposes.
Bank Credit
Banks extend credit in the form of loans to customers. The most obvious difference between bank and businessto business credit is the type of resource that changes hands in a transaction. A bank furnishes money, while a business supplier provides goods or services. Two other significant differences are (a) that bank credit extensions tend to be for longer periods of time, and (b) banks charge interest on outstanding debt. The final significant difference is the fact that banks tend to be secured creditors, while trade creditors tend to be unsecured credits. However, banks and trade creditors end up looking to customers for payment in cash. The bank does not want to foreclose on the debtor's assets just as trade creditors do not want their merchandise returned to them.
Reprinted with the permission of Credit Research Foundation.
Edited by Michael C. Dennis, author of "Credit and Collection Handbook." E-mail questions to mcdennis13@yahoo.com