The White House and SupplierPay: More Bark Than Bite Jason Busch - June 17, 2015 6:22 AM | Categories: Supplier Management, Suppliers, Trade Financing | Tags: L2, Sourcing and Categories When it comes to encouraging the use of e-invoicing, payment or trade financing standards and expectations, government moral suasion is terribly ineffective compared with government regulation and policy. Consider the case of the White House-led SupplierPay initiative compared with regional initiatives centered on e-invoicing adoption in Latin America. My colleague David Gustin recently opined on the topic on Trade Financing Matters. Here’s what he had to say: “Getting companies to volunteer and pledge without mandating change via regulations (like Brazil or Mexico have mandated electronic initiatives around trade flows) is just a tough road to travel. Companies fear if they pledge, they make a public commitment and risk a public incident with suppliers that say, ‘You pledged, but aren’t living up to the bargain.’ I get that. But I also get [that] many companies continue to push terms with their supplier base. Extended payment terms will continue to be a fact of life for small suppliers.” In other words, the White House photo opportunity for those that are taking part as part of the SupplierPay initiative may look good from the front office, but behind the scenes, CFOs and CPOs have started down an extended payment term path from which a reverse in course is highly unlikely. As David sums up the situation, “At the moment, the White House has no teeth in their proposition. But if small business continues to suffer longer payment terms, who knows, maybe actions will be taken that take choice away from big companies.” No doubt early payment programs can help. Some companies are taking action here, and as David observes, “I have spoken recently to a few large companies that know how to use their balance sheet and treat suppliers. It’s not complex, but it has to start at the top and run down through the organization.” Yet it’s a true minority stepping up to offer early payment programs that are accessible, appropriate and affordable (e.g., a “card” program alone is not a solution for all tiers of suppliers. Until Washington gets truly serious about e-invoicing, the speed of cashing flowing through the extended supply chain (what B2B “trickle down” is truly about at the end of the day) and the concerns of small businesses through policy rather than persuasion, I believe that SupplierPay and related programs will simply be about “bark” rather than “bite”. Related ArticlesMr. Gustin Goes to Washington and Other Musings on SupplierPayThe White House and SupplierPay: From the Basics to the Behind the Scenes Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of follow-up comments by email. Notify me of new posts by email.