Upside and Downside of Credit

Credit gives the customer the opportunity to buy goods and services, and pay for them at a later date.

+Advantages of credit trade
+Usually results in more customers than cash trade.
+Can charge more for goods to cover the risk of bad debt.
+Gain goodwill and loyalty of customers.
+People can buy goods and pay for them at a later date.
+Farmers can buy seeds and implements, and pay for them only after the harvest.
+Stimulates agricultural and industrial production and commerce.
+Can be used as a promotional tool.
+Increase the sales.
+Modest rates to be filled.

Disadvantages of credit trade
+Risk of bad debt.
+High administration expenses.
+People can buy more than they can afford.
+More working capital needed.
+Risk of Bankruptcy.