Nissan Seeks Supplier Payment Delays to Boost Liquidity Amid Financial Struggles

Nissan Motor is seeking to delay payments to some of its suppliers in order to free up short-term cash. The struggling Japanese automaker is looking to increase its liquidity by extending payment terms to its suppliers. This move comes as the company aims to bolster its financial position amidst ongoing challenges.

The company has reportedly sent emails and internal documents to its suppliers, outlining the request for delayed payments. This strategy is not uncommon among enterprises facing financial constraints, as it allows them to manage their cash flow more effectively. The new chief executive officer, who took office in April, has previously announced plans to reduce costs and improve operational efficiency over the next two years. The company aims to cut 500 billion yen (3.4 billion USD) in costs, which includes global layoffs of approximately 15% of its workforce and the closure of seven factories.

Nissan has specifically targeted suppliers in the United Kingdom and the European Union for this payment delay initiative. By extending the payment terms, Nissan hopes to alleviate some of the immediate financial pressure it is facing. This approach is part of a broader effort to enhance the company's financial stability and ensure its long-term sustainability. The company has also proposed similar requests in the past, including at the end of the previous fiscal year in March.

The decision to delay payments to suppliers is a strategic move aimed at conserving cash and improving liquidity. It reflects the company's proactive approach to managing its financial resources during a challenging period. By negotiating with suppliers to accept delayed payments, Nissan is seeking to optimize its cash flow and maintain operational continuity. The company has stated that suppliers have the option to receive immediate payment or accept delayed payment with interest. This flexibility allows suppliers to choose the option that best suits their financial needs.

Nissan's efforts to manage its cash flow through delayed payments to suppliers highlight the importance of financial flexibility and strategic planning in navigating these challenges. The company's proactive measures are aimed at ensuring its financial health and operational resilience in the face of ongoing industry pressures. The company has also expressed its commitment to maintaining sufficient liquidity to cover the costs of its transformation efforts and to repay maturing debt. Nissan expects its automotive business to have a negative free cash flow of 550 billion yen (3.8 billion USD) for the current quarter, which is worse than the 303 billion yen negative free cash flow reported for the same period last year.

Nissan's financial challenges are further compounded by its recent performance. The company reported a net loss of 45 billion USD for the fiscal year ending in March, due to declining sales and aging vehicle models. The company has also declined to provide earnings forecasts for the current year, adding to the uncertainty surrounding its financial outlook. Despite these challenges, Nissan remains committed to its turnaround efforts and is taking immediate action to restore its performance and rebuild a leaner, more agile structure.

Nissan's efforts to delay payments to suppliers are part of a broader strategy to improve its financial position and ensure its long-term sustainability. The company's proactive approach to managing its cash flow and negotiating with suppliers reflects its commitment to navigating the challenges it faces. By taking these steps, Nissan is seeking to optimize its financial resources and maintain operational continuity, even as it works to address its financial challenges and restore its performance.