Article: Can exporting SMEs benefit from extending longer payment periods? Journal: International Journal of Export Marketing (IJEXPORTM) 2021 Vol.4 No.3 pp.306 - 323 Abstract: This study investigates whether a connection exists between extending trade credit and firm performance after controlling for the degree of internationalisation, when measured by the scope of exporting activities in a sample of Finnish SMEs. While previous studies extensively explored the connections between performance and trade credit, as well as performance and internationalisation, to our knowledge, this is the first study to examine their combined effect. Our main results imply that, while domestic firms have a negative relationship between trade receivables and profitability, exporting firms benefit from longer collection periods. Moreover, when examined separately, there is a negative connection between extending trade credit and firm performance, as well as between internationalisation and firm performance. We contribute to previous literature by suggesting that previously observed results between trade credit and firm performance may be driven by the export activities patterns of sample firms. The results imply that, contrary to expectations, exporting firms benefit from longer outstanding sales periods. Inderscience Publishers - linking academia, business and industry through research

Title: Can exporting SMEs benefit from extending longer payment periods?

Authors: Saara Julkunen; Markus Mättö; Mervi Niskanen; Max Niskanen

Addresses: Business School, University of Eastern Finland, Microkatu 1 E, 70211 Kuopio, Finland ' Business School, University of Eastern Finland, Microkatu 1 E, 70211 Kuopio, Finland ' Business School, University of Eastern Finland, Microkatu 1 E, 70211 Kuopio, Finland ' Business School, University of Eastern Finland, Microkatu 1 E, 70211 Kuopio, Finland

Abstract: This study investigates whether a connection exists between extending trade credit and firm performance after controlling for the degree of internationalisation, when measured by the scope of exporting activities in a sample of Finnish SMEs. While previous studies extensively explored the connections between performance and trade credit, as well as performance and internationalisation, to our knowledge, this is the first study to examine their combined effect. Our main results imply that, while domestic firms have a negative relationship between trade receivables and profitability, exporting firms benefit from longer collection periods. Moreover, when examined separately, there is a negative connection between extending trade credit and firm performance, as well as between internationalisation and firm performance. We contribute to previous literature by suggesting that previously observed results between trade credit and firm performance may be driven by the export activities patterns of sample firms. The results imply that, contrary to expectations, exporting firms benefit from longer outstanding sales periods.

Keywords: trade credit; terms of trade; days sales outstanding; DSO; exporting firms; export sales; internationalisation; performance; profitability; small and medium-sized enterprises; SMEs.

DOI: 10.1504/IJEXPORTM.2021.119498

International Journal of Export Marketing, 2021 Vol.4 No.3, pp.306 - 323

Received: 21 Jun 2021
Accepted: 02 Sep 2021
Published online: 07 Dec 2021 *

Title: Can exporting SMEs benefit from extending longer payment periods?

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