Many SIMSA members have expressed deep concerns about the trend towards extended payment terms (terms beyond 30-days). As such, SIMSA contracted BDO to review the impacts.
The study’s results – available HERE– found that most SIMSA members use cash reserves for operations financing, and the net result is a transfer of working-capital pressure from customers to suppliers, impacting liquidity, financing costs, project execution, pricing, and long-term competitiveness. Extended payment terms harm competitiveness, growth and innovation.
It also found that the Membership Category “$10-20M” exhibits high financial exposure driven by larger contracts and complex project structures. And, the impact extends beyond individual firms into the broader supply chain.
As such, extended payment terms are not being absorbed passively, they are actively reshaping business operations. The study revealed:
It further revealed that these extended terms are impacting members’ ability to innovate, grow, retain staff, and:
SIMSA has shared the results with our partner producer companies – such as BHP, Cameco, Mosaic, Nutrien and K+S – and we have commenced a dialogue on what can be done to address these scenarios. Preliminary conversations have been positive (some very positive).