The Ethical Aspects of the Financing of Enterprises Through Trade Credit

Abstract

For many firms, a trade credit is one of the important sources of financing their business activity. While this arrangement brings some benefits to both suppliers and buyers, it also involves a risk of default by debtors. Late payments from buyers or, what is even worse, nonpayments prompt to take up the problem of payment reliability, which is the subject of this paper.

In the first part of the article, the author presents a trade credit in the context of trust, which is, next to such categories as mutual respect, reliability and punctuality of payments, one of the central concepts of the ethical codes of companies in the part describing relationships with the business partners. The second part outlines the problem of payment reliability among Polish enterprises. Then the author discusses some of the results of the research on late payment to suppliers. Although the low size of the sample did not allow for in-depth quantitative analysis of the phenomenon under study, it allowed to identify certain trends in the opinions expressed. The vast majority of respondents agreed that the trade payables must be paid in a timely manner, and delaying the payments to suppliers is unethical. At the same time, however, more than half of the respondents stated that in some cases, late-payments are justified, and the great majority of respondents from the group using a trade credit admitted to making payments after the due date (though usually with a low frequency). The results show some dissonance between the opinions expressed and payment behaviour of the respondents, signaling the need for further in-depth research in this area.