The most common and most likely answer to this crossword clue is the 7 letter word SCRUNCH
I've seen this crossword clue in The Guardian
S
C
R
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H
Buddy explains!

The straight part
We know that "squash" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case squash = scrunch.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does SCRUNCH mean?
SCRUNCH verb- To grind with the teeth, and with a crackling sound; to craunch.
- A crunching noise.
- To crumple and squeeze to make more compact.