Small businesses to receive faster payments
Today’s announcement by Rio Tinto to transition to shorter payment terms for Australian suppliers is part of a broader push by the resources sector to ensure small and medium-size businesses are paid in a timelier manner.
The Chamber of Minerals and Energy of Western Australia’s (CME) Chief Executive Paul Everingham said the resources sector had extensive procurement processes and initiatives to ensure small local businesses benefited from the multi-billion dollar projects of some of the State’s largest mining and oil and gas companies.
“The resources sector is continuing to demonstrate its commitment to local jobs, training and procurement to meet the current and future demands of industry,” he said.
“A survey of just 41 organisations within CME’s membership revealed more than 13,650 WA businesses were supported by the resources sector in 2018.
“A number of CME members are also voluntary signatories to the Business Council of Australia’s Supplier Payment Code (the code), committing to pay small businesses within 30 days of receiving a correct invoice,” he said.
“This currently includes companies such as Alcoa, BHP, Chevron, Fortescue Metals Group, Santos, Shell, South32 and Woodside Energy.
“If there is discretion to deviate from standard payment terms, some members also offer lower payment terms to small, local and Indigenous businesses on a case-by-case basis. Rio Tinto is doing just that with its new policy, which will ensure 90 per cent of its Australian business suppliers are paid within 20 days.”
In 2018, Rio Tinto supplier spend in Australia was around A$14 billion.