Trade vendor debt refers to obligations owed to suppliers or trading partners for goods or services provided on credit. These debts are typically unsecured, meaning they are not backed by specific collateral. Vendors extend credit based on business relationships and the expectation of timely repayment.

For example, a roofing contractor may purchase lumber from a supplier on credit, agreeing to pay at a later date. While most trade vendor debts remain unsecured, certain suppliers—especially those providing materials for construction or improvement projects—may have legal protections, such as mechanic’s liens or supplier liens. These liens allow vendors to place a claim on the property where their materials were used if payment is not received. In such cases, the supplier’s claim could take priority over other unsecured debts and may even impact the property’s title.

Because of these potential lien rights, suppliers in industries like construction, manufacturing, and wholesale distribution may impose stricter payment terms, require personal guarantees, or exercise lien rights to secure payment. Understanding the terms of trade credit agreements, including the possibility of liens, is essential for businesses managing supplier relationships and financial obligations.