A business decides to drastically increase its trade payable days from 30 days to 75 days by delaying payments to its suppliers. While this will improve the company's cash flow in the short term, what is the most likely negative consequence?

Correct answer: B) The company will lose the trust of its suppliers, potentially resulting in delayed deliveries or suppliers refusing to offer future credit

Explanation

Artificially extending payable days effectively forces suppliers to act as a source of free finance. This severely damages supplier relationships, risking supply chain disruptions, loss of goodwill, and the withdrawal of future credit facilities.