Suppliers to Rio Tinto will be waiting twice as long for accounts to be resolved after the company announced it would extend it’s terms of payment to 90 days.
The West Australian suggested the move would give the company’s balance sheet a boost ahead of the departure of CEO Sam Walsh in July.
It is understood tens of thousands of suppliers and contractors around the world will be affected, who are outraged over the problems the move could introduce to a sector already under significant price pressure.
This is the second change to terms of payment dictated by Rio Tinto in nine months, when Rio Tinto shifted the goalposts from 30 to 45 days for payment of accounts.
In some cases time for payment could be blown out to 120 days, given that Rio Tinto only pays its bills at the end of the month of receipt of invoice.
A spokesman for Rio Tinto said the change was intended to “free up cash and reduce working capital so that we can preserve and maintain jobs and suppliers in tough global environment for commodities”.
BHP changed their terms of payment shortly after Rio’s last change, from 30 days to 60 days, leaving FMG the most prompt paying iron ore major in the Pilbara, keeping their terms at 30 days.
A spokesman for FMG said the company had no plans to change their terms.