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When a company purchases goods using trade credit from suppliers, it is generally true that the buyer incurs no added cost if it pays on time. Trade credit is a short-term financing arrangement that allows a buyer to receive goods or services and defer payment for a specified period, often without any additional charges. If the buyer adheres to the agreed-upon payment terms, there are no interest costs or penalties, making it an attractive financing option for maintaining cash flow while acquiring necessary goods.

Recording trade credit as a long-term liability would be inaccurate because it is typically considered a short-term liability, reflecting obligations due within a year. Similarly, a supplier typically does not charge interest during the credit period unless the terms explicitly state that late fees apply after a certain date or if payment is extended beyond the agreed-upon terms. While suppliers may have the right to secure a lien on the goods sold in some cases to ensure fulfillment of payment, this is not a universal practice for all trade credit transactions.