The trade acceptance improves the business standing and credit of the buyer in that it gives to the seller a negotiable evidence of indebtedness with a fixed maturity date. The buyer in this way puts himself in a class of preferred merchants in much the same way as those who discount their bills for cash, since the acceptance in the hands of the seller could be discounted without an immediate payment of money by the buyer, in settlement of his obligation.

The impression conveyed to the seller by the willingness of the buyer to "accept," raises the credit standing of the buyer in the seller's estimation. The buyer, by giving the acceptance to the seller, reduces the debt to writing, thereby demonstrating his good faith in the transaction.

As a concrete example, the majority of raw silk importers and dealers in this country do not care to sell their products to even the best of houses if the basis of credit does not embody the giving of a trade acceptance. A certain firm operating no less than two dozen mills will not be sold by one of these raw silk importers on open account to the extent of a ten bale shipment, whereas, if trade acceptances are the basis of sale, merchandise will be sold on credit to the extent of two hundred and fifty bales. It is evident from the above that the credit standing of the buyer be raised in the estimation of the seller, and serves as an indication of how some houses prefer an acceptance and will not hesitate to extend the limit of credit to buyers who will use it.

The seller desires the acceptance, not because he may or may not be in need of the money, but because he wants to be assured of liquidity of his assets, afforded by the acceptance. May it not, therefore, be said that the acceptance serves to strengthen the credit of the buyer? Not alone this advantage, for the acceptance puts the buyer in the position of a preferred purchaser, as the giving of an acceptance entitles him to better consideration, which, if he knows his ground, he will invariably be successful in obtaining.

Acceptance Develops Careful Buying

A buyer who gives trade acceptances will buy more carefully. This is true, because if he knows that he has to meet payments at definite dates, he will not overbuy. A great deal of overbuying is done honestly but through poor judgment. If a buyer knows he must meet those obligations strictly, he will realize the necessity of exercising most careful judgment. The acceptance is, in other words, a regulator of business for the buyer and is of direct benefit to him. Naturally, one must always guard against a man who is inclined to overbuy from questionable motives. The acceptance, therefore, prevents overbuying, and indirectly benefits the buyer by keeping him away from the dangers prevalent in credit over-extension.

Acceptance Of Buyer Renders His Credit As Tangible As Cash

The mercantile agency of R. G. Dun & Company, in asking the business houses of the country for a statement as to their financial standing to serve as a basis for judging their credit, emphasizes the fact that credit is as tangible as cash and should be guarded and used accordingly. It is a proven fact that the European countries using the acceptance do at least five times as large a business with the capital which they employ as the United States does with its own. It is therefore, self-evident that the Europeans know how to use credit better than we, and in using this credit privilege, they take care not to abuse it. The evils flowing from the open account system of transacting business are such that they work at a disadvantage to the buyer in the end. By the use of the acceptance, the buyer cannot help but pay more attention to its purpose and more attention to the strenuous nature of its obligation.