Managing Account Payables

Lorenzo A. Preve and Virginia Sarria-Allende

in Working Capital Management

Published in print March 2010 | ISBN: 9780199737413
Published online May 2010 | e-ISBN: 9780199775637 | DOI:


Managing Account Payables

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In this chapter, we take the buyer's perspective and focus on the financing that suppliers extend to their clients. We emphasize that decisions on the use of trade credit financing are important for working capital management because they influence the size of the operating investment a firm needs to finance in the financial market. We show that, even though trade credit may be expensive, there are various reasons that explain its use. Finally, we discuss how trade credit should be measured and provide information about the differences in the use of trade credit across industries and over time.

Keywords: corporate finance; working capital management; trade credit policy; accounts payable

Chapter.  2309 words. 

Subjects: Financial Markets

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