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20 June, 2021

Businesses to benefit from BP terms

JOBS, growth, sustainability, cash flow and better planning capabilities.

By Meredith Papas

Those are just a few of the benefits Mackay, Isaac and Whitsunday small businesses stand to gain from following mining giant, BHP’s move to seven-day payment terms.

The decision, announced by BHP this week, will benefit small and medium enterprises, as well as traditional owner and indigenous businesses throughout the country.

Mackay’s smallest businesses – with fewer than 20 FTE (fulltime equivalent employees), who were registered and approved to supply BHP through its Local Buying Program - were set to benefit even further from changes to BHP payment terms.

The BHP Local Buying Program (LBP) is delivered across BHP operational communities throughout Mackay, Isaac and Whitsunday, and Central Highland regions as well as in New South Wales, South Australia and Western Australia.

It is facilitated by Mackay-based company, C-Res, and has led the charge on improving payment terms for small businesses throughout the country for the past nine years.

The program has also seen the generation of more than $680Million of approved spend for small businesses in regions throughout the country since its inception in 2012, according to the LBP website.

C-Res chairman, Darryl Camilleri said small businesses registered with the BHP Local Buying Program, had already been operating under contracted 21-day payment terms, although C-Res facilitated payments at an average rate of 14-15 days from the receipt of invoices.

Mr Camilleri said from July these payments would be brought back to seven days from receipt of invoice.

“Putting my accountant’s hat on, all businesses are stretched by (longer) payment terms,” he said.

“What this means for the wider business community is that this will drive business and drive the community.”

More broadly, the change will impact about 4000 suppliers operating out of 31 countries throughout the miner’s global operating footprint in Australia, North, Central and South America and the Caribbean.

The move follows BHP’s implementation of seven-day payment terms (down from 30-day terms) during the height of the COVID-19 pandemic.

It also follows implementation of the Payment Times Reporting Act (2020) which gave rise to the Payment Times Reporting Scheme. Under the scheme, companies with an annual turnover of $100Million or more are required to report their business payment times.

Greater Whitsunday Alliance CEO Kylie Porter also welcomed the decision to continue these reduced payment terms, saying it reflected the company’s ongoing acknowledgement of the importance of the local communities within its operational footprint.

“This is a wonderful decision by BHP,” Ms Porter said.

“It is recognition that the role of small business is critical.

“In a region such as ours, most businesses are small to medium enterprises and they just don’t have the huge, great big deep pockets of bigger companies.”

Ms Porter said the decision – which would see payment of invoices within seven days of them being approved by BHP – would help cash flow and better position businesses in their planning, as well as better enabling growth and possibly increase opportunities to employ.

“We are basically no longer financing the activities of a very big corporation.

“This will improve cashflow, improve the capacity to employ and it will allow businesses to plan for effectively.”

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