makes the business world go around. For the customer on the receiving end of the deal, it’s an important source of . This zero-interest ‘loan’ helps to keep operations going in times of high activity, and provides a boost to smaller businesses that don’t have access to sizable loans or other funds. To the company extending credit, the practice means being able to do business with more clients—including those that can’t offer funds up-front—and building customer loyalty.
This relationship relies heavily on trust. But that is not to say that companies should trust their customers blindly. Before signing a contract to extend credit, a company should always complete a thorough review of its customer’s credit history and run a . The problem is that proper financial information on a customer is often difficult to obtain.