updated 10:38 am EDT, Fri July 11, 2014
Meant to insure small suppliers get paid on-time
A variety of US businesses including Apple, IBM, and Coca-Cola have agreed to sign on to an Obama administration initiative dubbed SupplierPay. The program is a private-sector mirror of QuickPay, a federal effort to ensure that smaller contractors are paid within 15 days of issuing an invoice. Under SupplierPay, private firms are expected to pay smaller parts suppliers quickly.
The theory is that suppliers will have more money on-hand to spend on jobs, equipment, and other expansion efforts, instead of having to stretch budgets while they wait for delinquent clients. The White House argues that profitable supply chains are ultimately beneficial to those clients.
It also claims that businesses will sometimes take as long as two months to pay suppliers. This affects not only the suppliers, but sometimes subcontractors. Some firms can be forced to go into debt, further increasing their financial burden.