GM to Speed up Payments to Suppliers

Associated Press (9/25, Krisher) – General Motors Co. said it "has decided to speed up payments to its parts suppliers to help ease their cash flow problems and ultimately improve relations with the companies." According to industry analysts, "the move is important...because GM has had strained relations with its suppliers since the 1990s when it continually demanded cost cuts. As a result, suppliers offered new technology first to other automakers that paid better and more frequently, putting GM behind."  

Wall Street Journal (9/25, Terlep) reports that the he decision impacts 1,400 parts producers and 300 logistics suppliers in North America. GM is weighing plans to implement the same strategy around the world.

Detroit Free Press (9/25, Higgins) quotes Dan Flores, a GM spokesman, as saying that "the new system should reduce cash volatility for both GM and suppliers." Under the existing system, the automaker "pays its suppliers on a monthly basis, an average of 47 days after materials are delivered." The new system, according to Flores, "will continue the average 47-day lag time but will mean suppliers get payments every Tuesday." Bloomberg News (9/25, Merx) also reports the story.   Hat tip: NAM