Accounting

Including Trade Credits in your accounting system is a straightforward process and there are a number of clear guidelines to follow under GAAP.

Accounting and Trade Credit

Receiving Trade Credits in return for assets

  • Active restores value of asset by issuance of trade credits up to the three times of net realisable value of asset.
  • For example you have product (inventory) with a book value of $300,000 though with a realisable value of $100,000, Active with its model provide 300,000 in value to you generating $200,000 bottom line benefit.
  • Active will provide you a suggested accounting treatment of above which could be reviewed by your Auditors/Accountants and is widely accepted by local GAAP.

Spending Trade Credits

  • When your company purchases media and services, trade credits will be used to pay for the services.
  • For example you place a media campaign for $1.5 million.
  • $1.2 million will be paid in cash and $300,000 will be covered with trade credit redemption. 
  • Active can provide a tailored accounting treatment to suit the needs of specific clients. 
 

Case Study

FMCG Trade Credit Solution

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Farooq Ali

Contact us

If you would like to find out more about accounting or about the finance process of Trade Credit, get in touch with Farooq Ali, Head of Finance Australia by email or phone.

+61 2 9466 9130