In a move that benefits itself and its suppliers, General Motors has decided to send payments weekly rather than monthly starting Dec. 22. GM said that the change was made in order to limit large cash outflows and improve relationships with its suppliers.
Spokesman Dan Flores said the company won’t save money with this plan but then the change reduces cash volatility and limits the risk of suppliers getting low on cash. In addition, GM will not drain its cash reserves as much when it sends a payment. Flores was quoted as saying, “[I]t’s a better, more reasonable, smarter way to run the business.” GM had sought the input of its supplier council and after coming up with a decision, the company informed the suppliers about the plan during a conference call held recently. The weekly payments are scheduled for Tuesdays. Affected by this plan are all auto parts and logistics suppliers to GM’s North American plants. Soon, the plan will extend globally.
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