---
title: "Trade credit: definition | Rex glossary"
description: "Credit one business extends to another by delivering goods or services now and accepting payment later, on agreed terms."
canonical: https://www.rex.inc/glossary/trade-credit
---

# Trade credit

Credit one business extends to another by delivering goods or services now and accepting payment later, on agreed terms.

Trade credit is the default in B2B: most invoices are paid on terms such as Net 30 or Net 60 rather than upfront. Until it's paid, every invoice on terms is effectively an interest-free loan to the customer.

That's why receivables are often one of the largest assets on a company's balance sheet, and why how quickly they turn into cash matters so much for working capital.

## Related terms

- [Payment terms (Net 30) The agreed conditions for paying an invoice. Net 30, for example, means the full amount is due 30 days after the invoice date.](https://www.rex.inc/resources/glossary/payment-terms-net-30)
- [Accounts receivable (AR) Money customers owe a business for goods or services already delivered on credit, recorded as a current asset on the balance sheet.](https://www.rex.inc/resources/glossary/what-is-accounts-receivable)
- [Working capital Current assets minus current liabilities: the short-term cash a business runs on, heavily shaped by receivables, payables and inventory.](https://www.rex.inc/resources/glossary/working-capital)

Next step

Accelerate your receivables operation with Rex

A short walkthrough of agents working your accounts under your guardrails, with your team on the exceptions.

[Learn more](https://www.rex.inc/learn-more)

[Back to the glossary](https://www.rex.inc/glossary)