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Businesses Commit to Alleviate Their Suppliers’ Capital Costs

A recently released Department of Commerce report, “The Economic Benefits of Reducing Supplier Working Capital Costs,” highlighted how much the viability of our nation’s supply chain depends on large firms paying on time. Our small manufacturing firms—which account for more than 1/3 of manufacturing shipments and close to half of employment—face elevated capital costs, relative to large firms, because of lack of access to loans and higher interest rates. Large firms exacerbated these constraints through the Great Recession when they delayed payment for the good they ordered.

The Economic Benefits of Reducing Supplier Working Capital Costs

Large firms depend on suppliers for most of their value-added. Many suppliers are small and their viability is closely tied to their ability to access and manage working capital. The Obama Administration’s SupplierPay initiative was developed to bring companies together to address the working capital challenges facing small firms. This paper explores the potential economic benefits -- throughout the supply chain -- of reducing suppliers’ working capital costs.

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