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Ford, GM Speeding Payments to Small Suppliers

May 29, 2020
The automakers are offering to accelerate payments to some suppliers struggling with cash-flow as a result of the COVID-19 disruption, in order to keep their supply-chains functioning.

Ford Motor Co. and General Motors Corp. are offering accelerated payment programs to assist smaller suppliers that may be struggling with cash-flow disruptions resulting from the pause in the manufacturing supply chain undertaken to contain the COVID-19 pandemic. According to details reported by CNBC, the two automakers have set up payment programs through financial institutions.

The programs the OEMs have implemented will pay suppliers on delivery, rather than 40-60 days that are typical for such programs. According to the report, some suppliers had only lately received payments for orders delivered prior to the shutdowns in March, and under normal terms new payments would not be received until mid-summer.

GM is offering suppliers access to the “Early Payment Program” it established last year through Wells Fargo & Co.: Wells Fargo will make a payment to a supplier for the full value of an invoice, after the supplier pays a financing fee. Later, GM will pay the full amount to Wells Fargo.

Ford launched a similar program earlier this month, first with selected suppliers but soon will expand the number available to the offer.

Automakers are staging restarts of vehicle production across their organizations, following shutdowns of nearly two months, and ensuring the availability of parts and materials is considered essential to resuming supply-chain functionality.

Lockheed Martin Corp. similarly identified the need to assist smaller businesses that may be straining to keep their operations in order, so that the complex of suppliers delivering parts and materials to defense programs can be maintained. The defense aircraft and weapons system manufacturer has released more than $400 million since late March.

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