Which of the following is associated with reducing credit risk for suppliers?

Payment in advance is associated with reducing credit risk for suppliers because it ensures that payment is received before the supplier fulfills the order or provides goods and services. In this arrangement, suppliers have assurance that they will be compensated before any financial exposure occurs. This practice significantly minimizes the risk of non-payment, as the supplier does not extend credit to the buyer and does not have to worry about the buyer defaulting on payment after receiving the goods or services.

With payment in advance, the suppliers can better manage their cash flow and rely less on the creditworthiness of their customers. This method is particularly useful in industries where the risk of buyer default is high, as it essentially removes the uncertainty associated with extending credit.

Other options, while they may have their own benefits, do not inherently provide the same level of security against credit risk. For example, cash payments provide immediate liquidity but are not always feasible for all transactions. Comprehensive credit checks can inform suppliers about the risk associated with extending credit but do not eliminate it. Open account terms generally increase credit risk since they rely on trust and the buyer's willingness to repay after receiving goods or services.