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Working Capital Management$
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Lorenzo Preve and Virginia Sarria-Allende

Print publication date: 2010

Print ISBN-13: 9780199737413

Published to Oxford Scholarship Online: May 2010

DOI: 10.1093/acprof:oso/9780199737413.001.0001

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Managing Account Payables

Managing Account Payables

(p.97) 8 Managing Account Payables
Working Capital Management

Lorenzo A. Preve (Contributor Webpage)

Virginia Sarria-Allende (Contributor Webpage)

Oxford University Press

In this chapter, we take the buyer's perspective and focus on the financing that suppliers extend to their clients. We emphasize that decisions on the use of trade credit financing are important for working capital management because they influence the size of the operating investment a firm needs to finance in the financial market. We show that, even though trade credit may be expensive, there are various reasons that explain its use. Finally, we discuss how trade credit should be measured and provide information about the differences in the use of trade credit across industries and over time.

Keywords:   corporate finance, working capital management, trade credit policy, accounts payable

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