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

Question

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Stretching accounts payable means delaying payment to the supplier past the agreed-upon payment terms, which can create a disruption in the supplier's cash flow and increase their financial costs such as interest expenses or uncollected fees. Therefore, stretching accounts payable can represent a real financial cost to the supplier.

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