QBCC announces new MFR Policy
The Queensland Building and Construction Commission, QBCC, has recently announced the new Minimum Financial Requirements (MFR) Policy. The aim of the policy is to promote financially viable businesses within the building and construction industry and foster professional business practices. With a clear message from the QBCC to pay your debts and make sure you maintain your cash flow this article provides an overview of what the policy entails.
The Queensland Building and Construction Commission, QBCC, has recently announced the new Minimum Financial Requirements (MFR) Policy. The aim of the policy is to promote financially viable businesses within the building and construction industry and foster professional business practices.
The new MFR Policy no longer requires licensed contractors to provide financial information demonstrating they comply with the financial requirements yearly at renewal. Licensed contractors must still meet the MFR at all times and contractors with annual turnover in excess of $600,000 are required to submit a financial report to the Commission when they first apply for a licence or in order to upgrade their turnover limit.
This Policy change represents a significant reduction to the regulatory obligations of maintaining a licence. Previously licensed contractors were required to submit financial information to the Commission in the form of a report from their external accountant in order to renew their licence and larger contractors (turnover exceeding $12mil) had to submit audited financial statements.
The Commission is now moving to proactively monitor licensees, particularly on the issue of non-payment of debts to ensure swift response times. As the non-payment of debts in the building industry causes financial distress and financial collapse, the new MFR Policy requires licensed contractors to pay all debts within agreed trading terms. Failure to pay a legitimately owed debt that is not subject to genuine dispute will result in loss of licence.
The very clear message from QBCC is: pay your debts and make sure you maintain your cash flow in order to do so, or be forced out of the industry.
The new MFR has also streamlined the reporting type for all business size categories, in addition to an alignment of the age of financial information and the regularity of financial monitoring.
The self-certifying limits for trade contractors and entry level builders have been increased to reduce the financial barriers to small operators to grow their business. The annual turnover limits for these new self-certification categories have been doubled and is now $200,000 and $600,000 respectively.
All business owners go into business to make money and succeed. The building industry is one of the pillars of the Queensland economy and can be profitable for businesses operating in it, providing those businesses keep an eye on their performance. The new MFR policy requires all licensed contractors to monitor their financial performance at least quarterly. This aligns with completing and lodging a Business Activity Statement so as not to impose any additional administration burden on licensees.
The aim of the policy is to promote financially viable businesses and foster professional business practices.
If you require support in understanding your financials or key drivers of profitability, please contact your Hanrick Curran Adviser or call Matthew Beasley on 07 3218 3900.