GEA is pleased at coal firms' new payment terms
GLADSTONE Engineering Alliance has welcomed an announcement by BHP as well as last week's announcement by global coal company Peabody that they will now be implementing 30-day payment terms for their regional supply chains.
BHP announced a change to its procurement policies, extending preferred payment terms of 30 days to all Australian businesses in local areas.
That means more than 600 local businesses in Queensland will receive preferential payment terms from tomorrow. Peabody changed its procurement policies to extend preferred payment terms of 30 days for local suppliers last Thursday.
GEA acting CEO Julie Gelder said the announcement was good news for regionally-based businesses in the resources supply chain as many businesses were having issues with the delayed payments.
This had led to a number of firms cutting back on planned employment, reducing investment in more productive new plant and equipment and deferring investment in research and development.
"There has been strong concerns from the supply chain about the adverse impact of extended payment terms on businesses who may need to carry the cost of work in progress for several months before receiving revenue for their work," Ms Gelder said.
"The ongoing viability of businesses has been threatened by extended payment terms especially if they are unable to secure finance for their operations to cover their regular and unavoidable outlays such as wages, superannuation, and taxation payments."
BHP Billiton Mitsubishi Alliance (BMA) - the organisation's largest coal business - has agreed to implement the new terms, and asset president James Palmer said the decision was made after engagement with suppliers, host communities and industry bodies such as GEA.
"We've heard concerns about the impact of our standard global payment terms on local businesses and recognise there is more we can do to support our local communities," Mr Palmer said.
"We will extend our preferential terms further than the existing small and local businesses already captured."
Ms Gelder said Rio Tinto has been leading the way for some time now in reducing payment delays across Australia and with BHP/BMA and Peabody reducing their payment terms, the GEA believes industry has heard concerns from the local supply chain.