If one of your firm's customers is "stretching" its accounts payable, this may be a nuisance but does not represent a real financial cost to your firm as long as the firm periodically pays off its entire balance.

Question

Quizplus · Accepted Answer

Stretching accounts payable can lead to cash flow problems for the supplier as they may not have the funds available to cover their own expenses. This can result in the supplier having to borrow money or delay payments to their own suppliers, which can incur additional costs such as interest or damaged relationships.

If One of Your Firm's Customers Is "Stretching" Its Accounts