Please ensure Javascript is enabled for purposes of website accessibility

Ford Is Using Its Cash Hoard to Pay Some Suppliers Early

By John Rosevear – Updated May 22, 2020 at 5:19PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Ford is helping out cash-strapped suppliers as it restarts its U.S. factories.

Ford Motor Company (F 6.67%) is helping out some cash-strapped suppliers by paying its bills early.

Ford has created a new early payment program intended to ensure that cash-strapped parts makers have access to cash flow and working capital as they restart production.

Ford restarted most of its U.S. factories on Monday after a two-month shutdown amid the coronavirus pandemic. The shutdown probably cost Ford more than $10 billion, but the automaker has been able to weather the crisis thanks to an ample cash reserve that it set aside for an economic downturn several years ago. 

Two factory workers, wearing masks, attach parts to a truck.

Ford restarted most of its U.S. factories on Monday. Image source: Ford Motor Company.

Since its North American factories were idled in mid-March, Ford has added to its cash reserve by drawing down its credit lines and selling new bonds. As of April 24, Ford had about $35 billion in cash. 

Now, with plenty of money to ensure its own survival, it's aiming to help companies that supply it with critical parts — but that didn't have deep pockets when factories abruptly shut down in March.

Ford spokesperson Jennifer Flake said that the early payment program is new and still limited, but the company expects it to grow. For now, Ford is working with a few companies that supply key parts to its U.S. factories, she said, but the company plans to expand the program more broadly across its supply base at a later date. 

Ford currently expects to post a $5 billion loss for the second quarter. 

John Rosevear owns shares of Ford. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
F
$12.23 (6.67%) $0.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
331%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.