BHP has announced a change to its procurement policies, extending preferred payment terms of 30 days to all Australian businesses in local areas. That means more than 600 local businesses in Queensland will receive preferential payment terms from December 1.
BHP Billiton Mitsubishi Alliance (BMA) – The organisation’s largest coal business – has agreed to implement the new terms, and Asset President James Palmer said the decision was made following a period of engagement with suppliers, host communities, the Resource Industry Network and the Federal Government.
“We’ve heard concerns about the impact of our standard global payment terms on local businesses, and recognise there is more we can do to support our local communities.
We will extend our preferential terms further than the existing small and local businesses already captured.” he said.
All of BHP’s suppliers whose primary operating presence is in a local area like Mackay – regardless of size – will be placed on 30 day payment terms as the new local standard.
BHP Vice President Supply Sundeep Singh says the change will be a huge win in Central Queensland.
“Aside from making our policies simpler, the change will mean over 340 Mackay businesses will receive preferential payment terms.” he said.
30 day payment terms will extend to businesses in the Rockhampton region for the first time, which has been re-zoned as ‘local’ as part of BHP’s review of its procurement practices.
“As well as being a major employer in regional communities, we are also a major contributor to local economies – through the jobs we provide, and the goods and services we purchase.” said Mr. Singh.
“We value the communities we operate in, and want our local suppliers to grow strong businesses as we grow ours.” Mr Palmer added.
Businesses won’t need to apply for the new payment terms, and will be automatically moved to 30 days on 1 December.
A workshop will be held in Mackay for local suppliers in December, where BHP will assist businesses to work with its procurement system.
BHP’s total direct economic contribution in Australia, including its payments to suppliers, wages and employee benefits, dividends, taxes and royalties in the last financial year was US$19.6 billion.
Mr Palmer says BHP’s success nationally and internationally is built on strong local relationships.
“We understand that the strength and capability of communities that are local to us are critical to the strength and capability of our business as a whole.”