Including TRADE CREDITS in your accounting system is straightforward and there are a number of clear guidelines to follow under GAAP.

Accounting and TRADE CREDITS

Receiving TRADE CREDITS in return for assets

  • Your company and Active enter into a mutual Sale and Purchase contract for the asset
  • You raise an invoice for the sale of the inventory at the agreed TRADE CREDIT value
  • The asset value in the balance sheet is usually replaced by a pre-payment for the TRADE CREDITS issued
  • The TRADE CREDITS are typically carried in the balance sheet at the net realisable value of the asset surrendered in accordance with GAAP


  • When your company purchases media and services, Active raises invoices which are payable part in cash, part in TRADE CREDITS
  • VAT is charged at the required rate for the value of the media or services provided
  • As TRADE CREDITS are spent, an equal amount is credited to the prepayment account and then to the Profit and Loss account, until all TRADE CREDITS are spent

Contact us

If you'd like to find out more about accounting and TRADE CREDITS, get in touch with Lana Ilchenko, our Head of Financial Planning, Analysis and Compliance by email or phone

020 7520 6676