Whilst receivables management is concerned with shortening the credit length of collection of your own debt, payables deal with prolonging the credit sales of debt your business owes to others. The theory behind this is that the longer amount of time that is taken to pay your debts, the greater balance of payables leading to less interest accrued due to bearing debt.
Managing your payables is a crucial element to a business’s survival as failing to meet payments can lead to large charges greatly impacting a Businesses profit or potentially, legal action leading to assess being repossessed in order to pay for your debt, not to mention further legal costs associated with defending yourself.
Informing suppliers that you intend to pay them at a later date can lead to intangible downsides such as loss of goodwill with the supplier, leading to drawbacks ranging from becoming a lower priority customer, all the way to being to being cut off entirely forcing you to find other suppliers who may not offer products/services up to previous standards.