Business enterprises are set up to make profit. It is the aim of business enterprises that they make profit from the goods and services offered to customers. it should be known that for a business to survive and grow, it needs money. Money is needed to ensure that goods and services are available to customers. There are times when a business enterprise would not have enough money and would have to seek for loans. In such situations, it is advised that such business enterprise extend payables as long as possible.
By extending payables, it gives a business enterprise room to make profit from the money borrowed. It gives the business enterprise enough room to make large amount of profit to pay back the loan and still have some left. When a business enterprise extends payables, it wouldn’t be pressured to pay fast. Furthermore, instead of paying the loan, it can use the money to gain more money and the loan would be repaid at a later date