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We obviously were micromanaging our cash — down to the penny, down to the minute — because that was our lifeblood
GM Spokesman Dan Flores in an Automotive News [sub] story on GM’s decision to pay suppliers weekly instead of monthly. The savage irony? By making payments monthly, GM actually had a harder time managing its dwindling cash pile during the bad old days referenced by Flores. And now? “We’re not going to save money by doing this,” says Flores. “But it’s a better, more reasonable, smarter way to run the business.” On the downside, the changes won’t mean suppliers will get paid any sooner as GM plans on maintaining the 47-day lag between supplier delivery and payment. Plus ça change…
4 Comments on “Quote Of The Day: Least Necessary Use Of The Word “Obviously” Edition...”
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Like the old joke. How do you get paid?
Weakly, very weakly.
<iOn the downside, the changes won’t mean suppliers will get paid any sooner as GM plans on maintaining the 47-day lag between supplier delivery and payment
This is standard. My company has payment terms that are Net 45. Sure, we honor Net 10 and Net 20 terms as well, but we have negotiated a discount with the vendors if we pay on those terms.
?? It costs more money to send checks more often so I dont see how this helped and obviously it didnt in the grand scheme of things.
26, if there’s any way to stay more liquid, it’s a better business decision. It’s all about having dollars today versus tomorrow, because a dollar today can be invested. Sending checks often, if it means having more cash, is a better bet than paying all at once. Of course this has to be managed so you’re not piling on debt interest, but even that might have to happen if you’re up to your ears in assets & inventory with no cash to fuel the furnace.