14 June, 2021
BHP to roll out seven day payment terms
A GLOBAL mining company is set to introduce seven-day payment terms for small, local and indigenous businesses.
From July 1, 2021, BHP will implement the new payment terms across its global operations.
The change will benefit approximately 4000 supply partners across 31 countries, including the key operating regions of Australia, Chile, the United States, Canada, Mexico, and Trinidad and Tobago.
Each year, BHP spend approximately AUD$3.24 billion with small, local and indigenous businesses, which provide a diverse range of goods and services to BHP’s global operations.
The move follows positive feedback on quicker payment terms implemented by BHP for several months last year as a temporary COVID-19 support measure.
Resource Industry Media and Connecting Industry PTY LTD managing director Kieran Moran said this was a good outcome for businesses.
"It's a great outcome - there's a number of businesses who have gone out of business from waiting to be paid," Mr Moran said.
"It's been an issue within (the) industry for a long time. Waiting to be paid after you've done a job - sometimes up to 120 days or more - can be devastating for business.
"They still have their employees to pay, they still have to pay for the job they've just done and the usual business expenses.
"In Mackay, (the) industry has been critical of this system for a long time."
Mr Moran said that about 2019, a number of associations pushed the issue of 60/90/120 day payment periods.
"It was really initiated by Resource Industry Network in Mackay, who released a number of research papers and gathered evidence and called for the inquiry, which was then implemented."
He explained that, by switching to seven-day payment terms, more businesses would be able to survive.
"Depending on if you got an agreement with the company you're working with, it's mostly a 30 day payment. If you haven't, you'd mainly send a seven-day invoice to be paid," he said.
"The agreement with a number of mining companies has been, for a long time, 60 to 120 days, depending on the business.
"Over the years, a number of major mining companies have moved towards making this better."
"Many have now moved towards the 30-day payment scheme."