Recommendations to change extended payment terms
LEGISLATION RECOMMENDED TO CRACK DOWN ON LENGTHY PAYMENT TERMS
THE Federal Government has been urged to force miners to step in to force miners to adhere to 30-day payment terms by 2020.
The recommendation was made by the Industry, Innovation, Science and Resources Committee, in its recently tabled report for its mining enquiry, Keep it in the Regions: Mining and resources industry support for businesses in regional economies.
Gladstone Engineering Alliance welcomed the findings, after they appeared as witnesses at the inquiry to represent small to medium sized businesses working in the resources sector.
“A reliable cash flow and working capital enhances a business’s ability to grow, create jobs and plan for the future,” GEA acting chief executive Julie Gelder said.
“The stress and uncertainty of lengthy or late payments can take a direct personal toll on employees, owners and shareholders. 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”
Chaired by Hon Barnaby Joyce MP, the Federal Government report addressed a number of issues relating to the inquiry including mining companies’ procurement policies, royalties for regions, skills shortages and skills development, social licence to operate, and terms of payment and contract terms.
“The committee’s recommendation regarding payment terms is for the Australian Government to consider the outcome of the review into the Business Council of Australia’s voluntary Australian Supplier Payment Code (the Code) or enforce 30-day payment terms as early as 2020,” Ms Gelder said.
The report states if the review does not result in the significant strengthening of, and compliance by industry with, the Code, the Australian Government should then move to legislate maximum payment terms. If the Code is not significantly strengthened by July 2019, the report recommended the introduction of legislation which sets a maximum payment time for business to business transactions depending on the size of the company.
CAMPAIGN FOR CHANGE: Gladstone Engineering Alliance acting chief executive Julie Gelder.