Creditable behaviour? The intra-firm management of trade credit
Qualitative Research in Accounting & Management
ISSN: 1176-6093
Article publication date: 23 September 2014
Abstract
Purpose
This paper aims to explore the reasons for the apparent failure of many UK firms to achieve the competitive advantages indicated in largely positivist literature through the management of their trade credit positions.
Design/methodology/approach
The paper utilises data from a set of semi-structured interviews with trade credit managers in firms and is the first substantial qualitative study of the intra-firm aspects of trade credit management in the UK. Through this approach, we explore the reasons why the theoretical promise of trade credit may or may not be realised.
Findings
The principal findings relate to the importance of three organisational attributes (skills/awareness, communication and structural position of the activity in the firm). That is, trade credit management should be regarded as a relational activity and not merely a narrow technical function. The paper finds that there is no generic formulation of these attributes that can deliver on the promise of trade credit identified in the extant literature. Rather, individual firms must adapt themselves to suit their circumstances.
Practical implications
This paper will be of interest to and is relevant for companies, accounting professionals and policymakers. Trade credit represents a significant area of commercial risk, and the problems experienced with its effective management have previously proved somewhat intractable.
Originality/value
This paper reports on the first substantial piece of UK work to look at the actualities of how trade credit is managed within firms and what the implications of this are.
Keywords
Acknowledgements
The authors gratefully acknowledge the support of ACCA for the funding that made this work possible and the assistance afforded by Emmanouil Schizas, ACCA Senior Economic Analyst.
Citation
Boden, R. and Yassia Paul, S. (2014), "Creditable behaviour? The intra-firm management of trade credit", Qualitative Research in Accounting & Management, Vol. 11 No. 3, pp. 260-275. https://doi.org/10.1108/QRAM-08-2012-0032
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited