Abstract
Business ethics is growing in importance in both academic writing and in
corporate policy and practice. Yet, in spite of the importance of finance as a
component of business relatively little has been written about ethics in
finance. In particular trade credit has not been subjected to ethical analysis.
This paper develops an analysis of the ethics of trade credit through a focus
on payment «virtues». Payment virtue in organizations should include not
only prompt payment, but also quick payment. However, speed (slowness) of
payment, as measured by the number of days’ credit taken, is a misleading
indicator of the commendableness of a firm’s behaviour because of differences
in the supply chain characteristics of different industries. The other novel
aspect of our analysis is to go beyond a focus on the buying firm to introduce
into the picture the responsibilities of the firm supplying the goods or services
and credit. It is a financial problem with an ethical component in which we
emphasize the operational aspects of trade credit. Some countries, such as UK
have introduced some initiatives to encourage better payment behaviour by
companies. The possibility of implementing similar initiatives in Spain is
considered
corporate policy and practice. Yet, in spite of the importance of finance as a
component of business relatively little has been written about ethics in
finance. In particular trade credit has not been subjected to ethical analysis.
This paper develops an analysis of the ethics of trade credit through a focus
on payment «virtues». Payment virtue in organizations should include not
only prompt payment, but also quick payment. However, speed (slowness) of
payment, as measured by the number of days’ credit taken, is a misleading
indicator of the commendableness of a firm’s behaviour because of differences
in the supply chain characteristics of different industries. The other novel
aspect of our analysis is to go beyond a focus on the buying firm to introduce
into the picture the responsibilities of the firm supplying the goods or services
and credit. It is a financial problem with an ethical component in which we
emphasize the operational aspects of trade credit. Some countries, such as UK
have introduced some initiatives to encourage better payment behaviour by
companies. The possibility of implementing similar initiatives in Spain is
considered
| Translated title of the contribution | Ethics in trade credit: virtues and initiatives |
|---|---|
| Original language | Spanish |
| Pages (from-to) | 93-110 |
| Journal | Gogoa |
| Volume | 9 |
| Issue number | 1 |
| Publication status | Published - Apr 2009 |