Inadequate access to finance for small and medium-sized enterprises (SMEs) can present a major impediment to SMEs’ contribution towards driving sustainable economic growth. The aim of this article is to investigate the role of life cycle on SME financing decisions while focusing on trade credit. To this end, we study whether trade credit and its firm-factor determinants differ depending on the stage of life cycle of the SMEs. For the empirical analysis, a sample is employed of manufacturing SMEs operating in 12 European Union countries over the period 2008–2014 and a panel data model with fixed effects is applied. We find that the business life cycle influences trade credit and that this influence is stronger in young firms, although this relation is non-linear across the firms’ life cycle. We further show that the impact of firm-factor determinants on trade credit differs across the business life cycle in terms of magnitude levels. Our results demonstrate that the business life cycle matters when analysing trade credit, and it should therefore be considered when managers and policymakers strive to solve the financial problems of an SME and to consequently incorporate the SME into the sustainable economy.

Following an innovative approach, the effects of financial report quality on the use of trade credit in small and medium-sized enterprises (SMEs) are examined. This effect is considered in a direct and indirect way. Firstly, we analyze whether SMEs with low-quality information are more likely to use trade credit as a financial resource. Secondly, we investigate whether the relationship between trade credit and bank credit in SMEs is moderated by the quality of financial reports. For the empirical analysis, we use a sample of Spanish SMEs over the period 2004 to 2011, and apply a panel data model with fixed effects. The findings suggest that firms with low-quality financial reporting use more trade credit. Furthermore, the influence of bank credit on trade credit is found to be partially moderated by audit opinion.

This article analyses the determinants of the trade credit in Spanish manufacturing small and medium-sized enterprises (SMEs) from a new perspective. Specifically, we focus on the relationship between trade credit and other relevance financial resources: bank credit and self-financing. For the first time in the literature, a quantile regression approach is used, which takes into account the heterogeneity of firms in different quantiles of trade credit distribution. Our results show that the relationship between trade credit and other financial sources presents dissimilarities, including differences in sign, on SMEs with different degrees of trade credit. Our findings help to clarify the confusing results achieved in previous research on this topic.

This article analyses the turnaround strategies that can help a company to recover from a situation of financial distress. This study presents an innovative dynamic approach that follows the financial distress lifecycle from its beginning to its resolution while focusing on the Spanish context, which differs from the Anglo-Saxon context traditionally considered in previous studies. The methodology of the case study is employed in order to explore, on an in-depth basis, the features of the resolution of financial distress situations. To this end, the single case of a large Spanish listed company is examined over the period of 2008 to 2017. Our case study shows that the company undertook a wide range of restructuring strategies at a private level that are usually applied by distressed firms. However, for a long time, the company largely focused on debt restructuring. This lengthening of the restructuring process coupled with a weak recovery suggests a system for solving the situations of corporate financial distress that is not agile and that may also be relatively inefficient. The findings provide valuable support for practitioners in developing a successful restructuring response, and for policymakers in designing appropriate legislation on insolvency.