Trade Credit

Businesses give each other I-O-Us all the time. They are also known as trade credit.

Usually involving two businesses that have a stable financial footing, one business can buy goods or services from another business without paying until later, usually within one to three months. Oftentimes, these trades come with discounts. What a treat.

Speaking of treats: a chocolatey example. Say you own a hotel, one of those ones that puts chocolates on pillows (really, really big ones). After your giant, profitable hotel and the giant, profitable chocolate business have been business buddies for awhile, the chocolate business might offer you a trade credit, which means you can pay them in a month or so later. The sooner you pay, the bigger discount you can get, as a chocolatey gesture of goodwill. A sweet deal.

During the national annual chocolate lovers convention, you might offer the chocolate business a trade credit of hotel rooms. Bada bing, bada boom.