BHP improves payment terms

BHP will start paying invoices from small business suppliers after just seven days and has created a $6 million fund to support labour hire companies affected by COVID-19.

The improved payment terms, which start next week, are down from the standard 30 days and will apply to 1,100 Australian businesses with revenue of less than $10 million.

The restrictions on staff numbers have been removed.

The big miner said the accelerated payment program was expected to deliver approximately $100 million more quickly into the hands of its suppliers.

The company said this was part of a program to support its communities and regional economies during the COVID-19 pandemic.    

BHP said it would make immediate payments of outstanding invoices.

The $6 million fund will be used for one-off payments for people quarantined after entering Australia and to pay for labour hire employees not entitled to sick leave but affected by COVID-19.

Chief executive Mike Henry said BHP wanted to look after the wellbeing and safety of its people, communities and partners. 

“We are taking action to reduce the risk of transmission at our sites, in our offices and in our communities,” he said.

“Our local and small business partners play a critical role in supporting our operations and our people, and we know this is a very difficult time for them.”

BHP said it spends around $1.5 billion annually with Australian suppliers. 

The new policy has been announced about six weeks after rival miner Rio Tinto was forced to cut payment terms for small business suppliers after becoming embroiled in controversy over the practice of reverse factoring.

Rio announced in mid-February that suppliers with annual turnover of up to $10 million will receive payment within 20 days of a valid invoice receipt, an improvement on the company’s previous 30-day policy.

Rio Tinto chief commercial officer Simon Trott said the new policy applied to 90 per cent of the company’s Australian suppliers.