Trade payables

Money the company owes suppliers for goods and services already received. It is interest-free funding for as long as the supplier tolerates it.

A distributor with ₹3,900 crore of purchases and ₹540 crore of payables is taking about 51 days to pay.

Stretching payables looks like a free improvement in cash flow and sometimes is. A retailer selling for cash and paying suppliers in 60 days runs its whole business on the suppliers' money, which is a genuine structural advantage. Payables stretched by a company that cannot pay is a different thing entirely and shows up next as lost discounts, then as supply interruption.

Indian accounts carry a disclosure that makes the distinction visible. Amounts payable to micro and small enterprises are reported separately, along with any interest due on payments made beyond the statutory period, because those suppliers have a legal protection larger ones do not. A company with a rising balance in that category, and interest accruing on it, is not negotiating better terms; it is paying its smallest suppliers late, and the note says so in figures.

Compare the payable days trend with the supplier concentration disclosure. A jump in payable days at a company with one dominant supplier is worth a phone call.