Trade credit created by a supplier when it permits a client to pay in the future for goods or services that have already been delivered by the supplier. Payables are a common source of shortterm financing for many industrial and service companies. A client company is generally required to arrange payment within 7 to 180 days, though in some cases terms may extend even further. In exchange for granting the payment extension, the supplier explicitly or implicitly charges a financing cost. See also ACCOUNTS RECEIVABLE.

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