working capital

Small business vendors that frequently have to chase down larger clients to get paid might have reason to rejoice. According to a story in The Wall Street Journal, the White House has launched an initiative that will either speed payments to small suppliers or help them access “lower-cost capital.”

working capitalDubbed SupplierPay, the program has received the backing of a number of top-tier companies, among them Apple, Coca-Cola, Johnson and Johnson, FedEx and IBM.

The effort’s mission, said the White House in a statement (as quoted by WSJ) is to “strengthen small businesses by increasing their working capital, so they can grow their businesses and hire more workers.”

SupplierPay aims to get small business vendors paid within 15 days of rendering a service or product, says WSJ. That would greatly improve small business’s cash flows, making them less likely to have to take out large loans.

WSJ notes that SupplierPay builds on the QuickPay program, which the federal government launched in 2011. With QuickPay, the government requires larger contractors to pay smaller vendors “faster than typically required.”

Congressional Republicans are viewing the SupplierPay program as an abuse of power by President Obama to “advance his goals while broader initiatives are stalled in Congress,” according to WSJ.

The program is also fighting an uphill battle against large businesses that seek to delay payments to suppliers to increase their own working capital. According to the 2014 CFO/REL Working Capital Scorecard, appearing in the July issue of CFO, large companies increased their average payables period 2% last year.

Source: Apple, Coca-Cola Among Firms Signed on to White House Plan for Small Suppliers

Image: Thinkstock

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