Cash flow is differwnt from overall profit and loss. Stretchibg payment terms doesn't help you with the latter, it certainly does with the former. Assume you get your money from clients faster than you pay your suppliers, something quite common in retail.

One can be profitable and cash positive (best place to be in), cash positive and unprofitable (acceptable, especially for growth-focused businesses), cash negative and profitable (kind of ok-ish assuming some reliable backing by banks to cover any cash constraints) or cash negative and unprofitable (the by default dead category, excluding VC money I have the feelong a lot start and scale ups fall in this category at the moment).