Offering trade credit discounts is costly and,as a result,firms that offer trade discounts are usually those that are performing poorly and need cash quickly.

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Offering trade credit discounts can actually be a strategy used by financially stable firms to increase sales and build customer loyalty. While there are costs associated with offering trade discounts, such as the potential for bad debts, it is not an indicator that the firm is performing poorly.

Offering Trade Credit Discounts Is Costly And,as a Result,firms That