Purpose: This study investigates the interaction between trade credit and short-term bank loans among European Union (EU) firms, spanning small, medium, and large sizes. The research aims to determine whether these financing sources operate as substitutional alternatives or complementary resources within varying firm scales. Design/methodology/approach: The research is based on yearly financial data from the BACH database for three size groups of firms in the period 2000-2020. Methods include panel data models estimated for total sample and for individual size groups to capture the indirect impact of size on the relationship between short-term institutional financing and trade credit. Additionally, the study distinguishes between the supply and demand of trade credit. Findings: The research discovered complementary relationships between net trade credit and short-term bank loans for small and medium-sized firms, which contradicted the initial expectation of substitution, while large firms did exhibit the expected complementary effect. However, the impact of trade credit supplied and demanded varied across firm sizes, with small and large firms showing no significant effects while medium-sized firms displayed substitution effects. Research limitations/implications: The dataset employed in the study contains aggregated data rather than individual firm-level financial information. This choice represents a compromise between information richness and the need for harmonization to ensure comparability. Practical implications: The findings could be valuable for individuals engaged in the management of short-term corporate finances. Understanding the variations in managing receivables and payables, particularly influenced by firm size, can contribute to improved comprehension of business finance and its operational dynamics. This, in turn, can aid in effectively managing the trade-off between trade credit and short-term institutional financing. Originality/value: This research adds to the current body of knowledge primarily by employing a multi-faceted approach that encompasses three size categories and explores trade credit from both the perspectives of supply and demand. This approach provides insights into corporate short-term financing strategies, encompassing the interplay between trade credit and bank loans. [ABSTRACT FROM AUTHOR]