The
purpose of this paper is to provide evidence of how the business cycle
affects net-trade-credit and its components in firms on different tiers
of the value chain, including retail, wholesale and two consecutive
manufacturing tiers.

Data
were collected by the means of four surveys in the years 2006, 2009,
2012 and 2014, representing different phases of the business cycle, that
is, from strong economic growth to a deep recession and on to slow
recovery and finally into decline. Descriptive statistics and three
ANOVA models were used in the analysis of the data.

The
distinctive profile of each value chain tier appears to have an effect
on tier-specific trade credit dynamics. Overall, upstream positioned
firms and small firms are likely to experience a decline in the
net-trade-credit during uncertain economic times. The type of task
interdependence between tiers also appears to affect trade credit
dynamics in some tiers of the value chain. Furthermore, initiated by
recession, certain trade credit dynamics in the value chain suggest a
mechanism that transmits an increased working capital burden from
customers to suppliers along the value chain.

Results
are based on survey research with a limited amount of respondents and
geographical coverage, implying limited generalisability. The use of
implicit measures limits the conclusiveness of the research.

The
conventional perception of the power-based determination of trade
credit policies is complemented with a value chain-related task
interdependence perspective. The results of this paper also highlight
that a more holistic value chain perceptive on working capital
management would be more sustainable in comparison to firm-centric
approaches.