Chrysler Cashflow Crisis

Frank Williams reports that Chrysler is having serious cashflow problems and has taken a novel approach to dealing with it: “Chrysler will now be taking five percent off all [purchase orders] PO’s and will take 60 days to pay instead of 45.” This applies “to all existing orders, not just future orders.”

I would love to implement such a system with respect to my mortgage company and others to whom I owe money but, alas, suspect they would not be amused.

Then again, Chrysler may not get away with it for long, either. Stephen Green, who thinks we may be down to “the Big 2” before long. I stopped counting Chrysler among the “Big 3” when they got bought up by Daimler and never added them back once Daimler spit them back out, so I won’t miss them terribly. The concept of an “American” car is long outdated, anyway. My wife and I both drive “Japanese” vehicles that were designed and/or assembled in the United States.

FILED UNDER: Economics and Business, General,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Rick DeMent says:

    James,

    I’m not sure if this betrays your lack of experience as an independent contractor or if your just kind of lucky but big companies are, even during the best of times, notoriously slow to pay. The fact is that most small companies depend on one or two big contracts to make there nut each month and if one the those companies decided not to pay for 90, 120, 180 days what are they going to do? Sue them?

    Right now I have two outstanding invoices for over 10k that I simply can’t get a big hospital to pay. I get drips and drabs a few dollars here, a small invoice there but the lions share is over 120 days. I could stop doing business with them but someone else will be right there to take the gigs. I even have contract provisions for penalties for late payment and have never collected on it because if I tried I would never get work from them again.

    I have never gotten paid from any of the “big 3” in anything less then net 90 so this is a non-story. It might be that their “big” suppliers have to start waiting a few extra days but for the small guys, business as usual.

  2. Simon says:

    “The concept of an “American” car is long outdated, anyway. My wife and I both drive “Japanese” vehicles that were designed and/or assembled in the United States.” This is one of the most absurd and completely stupid comments that I have heard in a long time. The idea that wholly american owned and produced product is outdated is very dangerous. That is what has happened to the oil industry! We stopped producing oil here to import it elsewhere, now look. The middle east is selling gas for under the $1.00 a gallon while we are quickly approaching $5.00 in certain parts of the country. If we continue with this, we will be at the mercy of other countries who can munipulate prices and ultimately bring the world’s most powerful nation to it’s knees. All Japan has to do, is shut down it’s “american built” factories over here and poof goes our transportation. The smartest thing to do, is to fix the american automotive industry and restore pride to the american OWNED and BUILT auto companies. No other country, has such disloyal citizens as the US. I don’t get it!!!