Hi there,

I would like to clarify a few things in regards to small business'.

There is a small production business that sells the goods it produces and does not sell on credit but it's purchases are bought on credit/accounts payable.

The business has quick inventory turnaround so money isn't tied up in Working Capital. The businessseems to be profitable each year but the accounts payable are increasing each year. Revenue is flat/growing slightly.

From a cash flow perspective you can make the business look more cash flow positive by delaying the payment of accounts payable. Is this correct?

If the business was drawing out every bit of cash in the business and A/P was increasing each year , the owners are in effect using this "debt" to pull more cash of the business. Is this correct?

Would this slowly turn into a long term problem?

Appreciate the feedback and hope you understand my question
Cheers