Newspaper article The Observer (Gladstone, Australia)

Call out to Cut Pay Lag; Payment Terms of Mining Companies Can Blow out to as Much as 90 Days

Newspaper article The Observer (Gladstone, Australia)

Call out to Cut Pay Lag; Payment Terms of Mining Companies Can Blow out to as Much as 90 Days

Article excerpt

GLADSTONE Engineering Alliance is calling on Central Queensland's resource and mining, equipment, technology and services sector to fight for a 30-day payment scheme from the resource industry.

GEA has called for submissions to a Parliamentary Inquiry into Mining Industry Support for Regional Businesses, due by close of business today.

The GEA represents over 200 businesses working in the supply chain in the Central Queensland resources sector and has been working with industry to gain improvements to the payment terms of resource companies which can be up to 90 days.

GEA acting chief executive officer Julie Gelder said there is concern from the supply chain about the potential 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.

"The ongoing viability of businesses may be threatened by extended payment terms if they are unable to secure finance for their operations to cover their regular and unavoidable outlays such as wages, superannuation, and taxation payments," Ms Gelder said.

"Extended payment terms impose additional finance costs ... and increase the risk of insolvency.

"The risk to financial viability increases sharply for those firms with lower turnover and cash reserves, which may find themselves having to carry the cost of work-in-progress before related revenue comes in. …

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