Nissan aims to delay supplier payments to preserve cash flow, internal emails show
New CEO Ivan Espinosa, who took over in April, has unveiled plans to shed about 15% of Nissan's global workforce and close seven plants as he targets ¥500bn (R60,528,840,000) in cost cuts over the next two years. Battered by slumping sales and weighed down by an ageing vehicle line-up, the car maker reported a $4.5bn (R80,111,672,100) net annual loss in the financial year that ended in March and has declined to give a forecast this year.
Now, Nissan has asked some suppliers in Britain and the EU to accept delays in payment, according to the correspondence reviewed by Reuters and a person with knowledge of the matter. The move would allow it to have more cash on hand at the close of the April-June first quarter and follows similar requests before the end of the last financial year in March, the emails showed.
It is not uncommon for companies to request payment extensions from suppliers to help free up cash. In a statement to Reuters, Nissan said it had incentivised some of its suppliers to collaborate under more flexible payment terms, at no cost to them, to support its free cash flow. 'They could choose to be paid immediately or opt for a later payment with interest,' Nissan said.
The correspondence, which has not been previously reported, gives a detailed look at Nissan's effort to conserve cash in the short term, even if that means paying suppliers more down the line.
The emails were exchanged among Nissan employees in Britain and the EU, including staff in its purchasing and treasury departments, according to their profiles on LinkedIn. One employee told co-workers in emails this month that suppliers were 'again' being asked for an extension of payment terms. It was in line with the aim to bolster free cash flow 'requested from CEO top down', the employee told colleagues.
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