MELBOURNE, Australia--(BUSINESS WIRE)--Rio Tinto will immediately begin transitioning small Australian suppliers to shorter payment terms that will see them paid within 20 days of receipt of a valid invoice. This move, which will apply to suppliers with annual turnover up to A$10 million, reflects Rio Tinto’s recognition of the importance of ensuring smaller suppliers, whom are often local to its Australian operations, are paid in a timely manner.
Rio Tinto chief commercial officer Simon Trott said, “Small businesses are often the lifeblood of the communities in which we operate and being paid quickly is important for their cash flows. That is why we are shortening our payment terms to less than three weeks in order to further strengthen our partnership with smaller Australian suppliers, that are a vital part of Rio’s supply chain.
“As a result of the new policy, around 90 per cent of Rio Tinto’s Australian business suppliers will be paid within 20 days.”
The new policy expands Rio Tinto’s definition of small suppliers from being those who supply up to A$1 million of goods and services to also include businesses with annual turnover of up to A$10 million. The new payment terms, and ongoing work to simplify and systemise our procurement processes, reflect a commitment to improve our partnership with suppliers.
Notes to editors
Rio Tinto has a strong local procurement strategy designed to increase opportunities for Australian businesses to be a part of the Rio Tinto supply chain. Procurement practices, and those of Rio Tinto contractors, help sustain many Australian businesses and, in turn, local communities.
In 2018, Rio Tinto supplier spend in Australia was around A$14 billion.