What are extended payment terms?

Extended payment terms refer to options that allow a business to delay its bill payments to suppliers. This practice can be beneficial for managing cash flow, as it provides additional time for the business to accumulate revenue from sales before settling payments with suppliers. Businesses often negotiate these terms to enhance financial flexibility and optimize their operating capital.

The correct option reflects this definition by explicitly stating that it relates to delayed bill payments. In contrast, immediate payment options for suppliers entail settling invoices right away, which would not be aligned with the concept of extending payment terms. Short terms for refund policies focus on the timeline associated with returning items rather than financial agreements with suppliers. Loans with high interest rates pertain to borrowing money and would not apply to the context of payment terms in supplier transactions. Therefore, the option chosen accurately encompasses the meaning behind extended payment terms in a business setting.