Rumerion Inc., a shoe manufacturing company, buys its raw materials from Coy Kaymilford, a footwear raw material supplier. Coy Kaymilford allows Rumerion Inc. to make the payment at a later date, as opposed to immediate payment. Which of the following short-term financing options is being used by Rumerion in the given scenario?
A) Factoring
B) Trade credit
C) Short-term bank loans
D) Commercial paper

Question

Quizplus · Accepted Answer

Rumerion Inc. is using trade credit, which is when a supplier allows a buyer to purchase goods or services and pay for them at a later date.