- It may be an indication of a cash flow issue that is preventing the business from paying its bills in a timely manner;
- Accounting and bookkeeping processes may be inefficient or loosely managed;
- This may be a clue that there is a problem with the vendor or its quality that is causing the business to delay payment until the issues, billing disputes, claims, or warranty items are resolved;
- The company may end up with (or may currently be getting) worse pricing from vendors because of a slow payment history;
- The company might be at risk of a vendor only providing products or services C.O.D.; or
- The business might be at risk of losing a supplier because of slow payment, and if so, will there viable alternate vendors with equal or better pricing, terms, and quality?
While having aging payables may seem like somewhat of a positive as it indicates the ability to conserve cash, payables that are aged beyond 30 days can cause concern for a business buyer. The reasons for this concern include:
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