According to foreign media reports, according to a number of emails and a company document, the troubled Japanese car company Nissan Motor has asked some suppliers to allow delayed payments in order to ease short-term financial pressure. This move highlights that Nissan is eager to improve cash flow.
According to correspondence and people familiar with the matter, Nissan has recently requested some suppliers in the UK and the EU to extend the payment cycle. According to the relevant email, the move is aimed at strengthening the company’s cash reserves at the end of the first fiscal quarter (April to June). It is reported that before the end of the previous fiscal year in March this year, Nissan also made similar requests to suppliers.
Image source: Nissan Motor
It’s not uncommon for businesses to request extended payment terms from suppliers. Nissan said in a statement to Reuters that it reached more flexible payment terms with some suppliers by providing incentives, aiming to optimize corporate cash flow without additional costs from suppliers.
Nissan made it clear: “Suppliers can choose to collect money immediately or choose a deferred collection plan with interest compensation.” ”
The email shows that Nissan offers two options for suppliers: one is to accept deferred payments and receive a higher amount; The second is to collect the payment on time, in which case HSBC will pay first, and Nissan will then repay the principal and interest to the bank. HSBC was listed as one of the cooperative banks in a document filed by Nissan in March this year, and the bank declined to comment on customer affairs.
The correspondence details Nissan’s short-term cash reserve strategy, although it means that more payments to suppliers may be required in the future. According to LinkedIn profiles, the emails were mainly between Nissan UK and EU employees, involving people in the purchasing and finance departments.
This month, an employee told colleagues in an email that Nissan suppliers were “again” asked to extend payment terms, in line with the goal of enhancing free cash flow “as demanded by Nissan’s CEO from the top down.” However, Nissan said that its CEO did not give specific instructions on the functions and tasks of each region.
The employee said that the June payment would be delayed until August 15, and then added that some payments would be delayed until September. The employee also said that the request was sent earlier this month, but the supplier will not be forced to accept the deferred payment.
Seiji Sugiura, senior analyst at Tokai Tokyo Intelligence Lab, said: “This shows that Nissan is facing difficulties in financing, and they seem to want to delay current expenses as much as possible.” ”
Nissan said in a statement that it is taking urgent action to restore performance and reshape a leaner and more resilient corporate structure. While taking these measures, the company aims to maintain sufficient liquidity to cope with transition costs and repay maturing bonds. ”
Nissan expects free cash flow from the automotive business to be negative of 550 billion yen (about $3.8 billion) this quarter, a further deterioration from the negative value of 303 billion yen in the same period last year.
Nissan Motor Corporation Chief Financial Officer Jeremie Papin said in May that the first fiscal quarter is expected to be Nissan’s most challenging period according to typical seasonal patterns, but the company aims to achieve positive free cash flow in fiscal 2026.
It is unclear whether Nissan has made similar requests to other regional suppliers, how many suppliers have been contacted, and the extension period sought. It is worth noting that in Japan, Nissan has previously faced scrutiny of payment issues due to regulators discovering that it had illegally underpaid dozens of suppliers.
A Nissan company filing in October 2024 showed that it is expected to increase free cash flow by up to 59 million euros by extending payment terms with more than a dozen companies in the UK and the EU, including ManpowerGroup’s UK subsidiary and Mitsui O.S.K. Lines.
As of the end of March this year, Nissan held 2.2 trillion yen (about $15.1 billion) in cash and equivalents, and faced about 700 billion yen in debt maturity this fiscal year. All three major rating agencies have downgraded Nissan’s debt rating to “junk level”, and Nissan said in a document this month that any further downgrade could complicate its future financing plans.
