Definition: Trade credit

Category: External debt - IMF

Trade credits consist of claims and liabilities arising from the direct extension of credit by suppliers for transactions in goods and services, and advance payments by buyers for goods and services and for work in progress (or to be undertaken). 

The direct extension of trade credit by buyers arises when they prepay for goods and services; the debt is extinguished when the supplier provides the goods and/or services. http://ec.europa.eu/eurostat/ramon/statmanuals/files/external_debt_guide_2003_EN.pdf#page=227