It's almost a tautology, but by paying late you keep your cash available for other uses until you pay. Cash flow can be the limiting factor for many (most?) bus

It's almost a tautology, but by paying late you keep your cash available for other uses until you pay. Cash flow can be the limiting factor for many (most?) businesses. Another way of looking at it is that by paying late you pass some risk from yourself to the recipient. Interest rates quantify both the time value of money and the risks associated with payment in the future. Paying late without penalty is an interest free loan.