General Motors Co., attempting to improve relationships and cash flow after emerging from bankruptcy, will begin paying most suppliers weekly instead of monthly.
The automaker informed the vendors of the change during a monthly conference call early today, said Dan Flores, a GM spokesman. Detroit-based GM will change the payment terms for most of the direct materials, logistics, and service and parts companies beginning with shipments made in November, he said.
"It's a good thing all around," said Neil De Koker, managing director of the Original Equipment Suppliers Association in Troy, Michigan. "It reduces the big swings in cash flow for GM and for suppliers."
Chief Executive Officer Fritz Henderson is trying to return GM to profit after leaving a U.S. government-backed bankruptcy on July 10. The automaker said in August it would share more savings when partsmakers propose cost-cutting ideas, responding to a government task force recommendation for forging stronger ties with the businesses.
"It's one of the things we are doing to improve the way we work with suppliers," Flores said. GM doesn't expect any cash savings from changing the timing of payments.
GM had for years paid the affected suppliers once a month, 47 days after delivery on average. The terms will change for companies shipping to North American plants beginning with shipments made on or after Nov. 1. The companies will begin receiving weekly payments on Dec. 22.
Delphi Corp. and American Axle & Manufacturing Holdings Inc. are among GM's largest suppliers.
