Thousands of small businesses will see the benefits of faster payment times after Rio Tinto moved to 20-day payment terms for 90% of its suppliers.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell says this is excellent news for small businesses that trade with Rio Tinto.
"Rio Tinto is showing corporate leadership by changing its payment terms to within 20 days of receipt of invoice, and we are encouraging other big businesses to do the same," Ms Carnell says.
"We welcome Rio's new policy, which expands the definition of small business from being those who supply up to $1 million of goods and services to the miner, to also include businesses with annual turnover of up to $10 million.
"This is a positive move that the small business community will welcome.
"Rio Tinto is demonstrating it understands the needs of Australian small businesses.
"Cash flow is always king for small businesses and we know that by paying small businesses on time, the whole economy benefits.
""Both our Payment Times Inquiry and our Insolvency Practices Inquiry show that cash flow is the leading cause of insolvency.
"Overall, Rio Tinto is setting an example on payment times and this should be the benchmark for all big businesses in Australia."
