GM Cash Crunch: New 60-Day Payment Terms Force Suppliers to Bankroll the Biz
Jim Higgins
http://tinyurl.com/4kzhrf
TTAC has secured a letter from GM’s purchasing department whereby the
ailing American automaker informs its suppliers that it’s changed its
payment terms. GM used to pay its indirect (i.e. non-production)
suppliers “second day, second month;” roughly 35 days from receipt of
goods. The new agreement stipulates payment will be made at 60 days from
receipt of invoice. In effect, GM’s cash position has deteriorated to
the point where it’s borrowing from its suppliers to survive. The letter
was sent to GM suppliers on September 26. The new policy went into
effect on October first, giving suppliers no chance to plan or prepare
for the change. Their cash flow is now under threat; many won’t be able
to arrange the financing needed to carry the cost. If this policy is
widened to direct, production suppliers, the impact could be
catastrophic. [Thanks to you know who you are]
GM Letter to Suppliers
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