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If your customers pay you X amount in advance and you hold that money for 30 days, you are X amount richer all the time. Imagine running a business with $10 bil
by Geee 14y ago
If your customers pay you X amount in advance and you hold that money for 30 days, you are X amount richer all the time. Imagine running a business with $10 billion in revenue but without profit and that starts to make sense. Typically, companies try to pay their bills as late as possible. I think there's also some 'professional' term for this type of cash handling, which I don't know. So, you can pay them immediately, but you'll have to operate with less money in your bank account.
- murtza 14y agoI think accounts payable is the term you were looking for. Here's a link to Wikipedia for the term: http://en.wikipedia.org/wiki/Accounts_payable http://en.wikipedia.org/wiki/Accounts_payable