25 September 2009 | Jake Kanter
General Motors plans to pay suppliers once a week under a new billing system.
From 1 November vendors will be paid every Tuesday in an effort to improve cash flow during a difficult trading period for the US automotive industry. The move reduces GM's current payment times from an average of 47 days.
Around 1,700 North American direct material and logistics suppliers will benefit from the scheme, which could also be extended to vendors overseas.
GM spokesman Dan Flores told SM: "We're going from a huge cash distribution every month to smaller amounts. It reduces cash-balance requirements, volatility and suppliers' need to draw on lines of credit."
CPO Bob Socia announced the measures to vendors in a conference call yesterday. It is one of a number of changes he has made to supplier relations since GM emerged from Chapter 11 bankruptcy earlier this year.
Last month the firm announced plans to share its savings with vendors in an effort to improve vendor relations (Web news, September 2).