On July 11th, the White House, in tandem with the SBA, rolled out a promising new strategy to help drive small business growth. Dubbed, “SupplierPay”, it’s a new initiative aimed at providing American entrepreneurs access to affordable, consistent working capital. It is about ensuring that large corporations pay their suppliers on time, so that those suppliers can in turn invest in new equipment, products, people or expansion into new markets.
Becoming a part of large corporate supply chains has been a successful strategy for many American businesses over the years, doubly true in the “era of consolidation”. By signing contracts with major corporations, small businesses create work pipelines that can significantly increase their revenue and profits. Unfortunately, many small businesses often find that large corporations take longer to pay, sometimes months. As timely payments can often make or break a small business, seeing to it that these entrepreneurs are paid on time, consistently, is a key to strengthening small business stability and economic growth.
As part of the new program, (26) major corporations, including companies like Apple, AT&T, IBM, Johnson and Johnson, Lockheed Martin, Nissan, Toyota, Salesforce, Toyota, Walgreens and Westinghouse among others, have signed up with pledges to shorten payment times or otherwise provide creative financing solutions so that their small business suppliers have the confidence to proceed with expanding their operations.
The SBA is taking the lead in recruiting additional corporations to join the program, which provides a “Win-Win” for both the small businesses and their corporate partners. The SBA notes that, “There is a spillover effect when capital costs are lowered. It reduces the price of goods and services. It allows investments in human capital that reduce preventable errors. It increases returns on cash and improves the overall stability of supply chains.”
SupplierPay builds on the success of the Federal Government’s “QuickPay” initiative, launched in 2011. Quickpay requires federal agencies to expedite payments to small business contractors with the goal of paying within 15 days, resulting in cost savings for those businesses. You can find out more information about the new SupplierPay program here.