President Obama has launched a new program to ensure that large corporations pay small contractors in a more timely fashion to increase cash flow through the supply chain, the White House announced this morning. Twenty-six corporations have already signed on, including tech giants Apple, IBM, and Salesforce.
The Obama administration held a meeting with businesses, their suppliers, and the head of the Small Business Administration this morning to create the program, dubbed SupplierPay. A program like this one, called “QuickPay,” has existed since 2011 to ensure that federal employers pay back contractors in a timely manner, 9-to-5 Mac reports. This new SupplierPay program would provides a similar guideline for the private sector.
Traditionally, companies take as long as two months to pay their contractors, but with SupplierPay, small contractors must be paid within 15 days of submitting invoices.
“For the larger companies, joining SupplierPay demonstrates a recognition that a healthy supply chain is good for business. For the small business suppliers, benefiting from SupplierPay means having more capital to invest in new opportunities, new equipment, and new hiring,” the White House stated in its release.
The goal of SupplierPay is to help small business avoid borrowing money. When a large company takes a long time to pay back a small firm, the small firm can have difficulties paying their own subcontractors or to making capital investments without accessing credit.
Apple’s backing of the new program is noteworthy. The company has already pushed supply chain responsibility and releases an annual report that chronicles enforcement of its Supplier Code of Conduct across its hundreds of contractors.
Here is the full list of the 26 companies currently signed on with the program:
Rothschild North America
Johnson & Johnson