Obama pushes faster payments for small businesses with help of Apple, IBM, FedEx


President Obama has announced a new White House initiative meant to hasten private-sector payments to small businesses. (Michael Reynolds/European Pressphoto Agency)

Many small business owners bemoan the often lengthy amount of time it takes to get paid by their commercial clients.

President Obama, it turns out, has had enough of that, too.

The White House on Friday will announce that dozens of the nation’s largest companies have agreed to more quickly pay their suppliers for parts and services or help those suppliers access less-expensive financing, a move the administration hopes will buoy small businesses.

Among the 26 corporations that have signed on are technology giants Apple and IBM. Coca-Cola, FedEx, Honda, CVS and Walgreens will also participate in the initiative, which the administration is calling SupplierPay.

“Prompt payment is absolutely critical for us,” said Jason Roys, president of Alexandria-based SDV International, which provides technology and program management consulting services to clients in the defense industry, as well as IBM. He noted that IBM’s turnaround time is already shorter than that of many other firms in the market.

Still, even faster would be even better.

“We’re small and cash flow is a major constraint,” Roys added. “If we’re paid sooner, that would allow us to more quickly reinvest our earnings.”

White House officials note that small suppliers on average wait about two months to get paid for goods and services — and those wait times have been growing in the past few years.

“For the larger companies, joining SupplierPay demonstrates a recognition that a healthy supply chain is good for business,” the White House said in a statement. Meanwhile, for small firms selling to those corporations, it will translate into “more capital to invest in new opportunities, new equipment, and new hiring,” the statement said.

The program is modeled after a similar White House initiative called QuickPay that requires federal departments to hasten payments to small-business contractors, ideally within 15 days. Since launching three years ago, the program has already generated more than $1 billion in cost savings for small contractors, the administration said.

Obama plans to expand that existing program to force large prime contractors to expedite payments to their small-business subcontractors — another move that would help Roys’ firm. Right now, his company may wait anywhere from 75 to 90 days for compensation for subcontracting work, compared to only two weeks for direct payment from the government on its prime contracts.

“It becomes quite daunting to think about covering our payroll for 90 days after our staff starts working on a project,” he said.

The announcement comes as the president looks for ways to stimulate economic growth without the help of a gridlocked, midterms-focused Congress. On Friday, Obama and some of his senior advisers are hosting executives from some of the new program’s participating corporations and their suppliers to discuss more steps the administration could take to help private businesses.

Follow J.D. Harrison and On Small Business on Twitter.

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.
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