The Role of Credits and Bank Guarantee Letters in Financing Trading Companies

Abstract

Banks provide businesses with a multitude of bank instruments which may be used to finance and develop the business of entrepreneurs. Of these, credit and guarantee instruments are the most commonly used. This paper aims to identify financing alternatives to classical loans so that businesses can carry out their work by attempting to outline the impact of credit instruments as well as of guarantee instruments used at trading company level on economic and financial indicators and on cash flow. The achievement of this approach is useful in the relationship between entrepreneurs and banks, so that the most suitable bank instruments can be used to develop the business in a changing business environment.

Keywords

• economic and financial indicators
• bank guarantee letters
• bank credit
• cash flow
• bank instruments