In Queensland, building contractors are required to comply with the Minimum Financial Requirements (MFRs), which are regulated by the QBCC. This week, Kirsty Stewart shares her top tips for contractors to ensure they comply with the MFRs and maintain a financially sustainable business:
- It is a condition of a building contractor’s licence that the licensee comply with the MFRs at all times and not just on the date of lodging an annual report.
- Cash is king. Ensure you maintain a sufficient current ratio and have sufficient Net Tangible Assets (NTAs) to support the revenue you are earning.
- Pay your debts on time. The MFRs require a licensee to pay a debt owing by the licensee to a contracted party, or a supplier of goods or services, on or before the day the debt becomes due and payable.
- Engage a “qualified accountant” that has experience with the QBCC MFRs and is not considered to be “excluded” by the QBCC.
- Diarise your annual reporting date and allocate the time and resources to ensure you meet the renewal date.
- Be proactive and meet regularly with your accountant – not just to prepare and/or lodge BAS or annual reports but to obtain accounting advice on the best trading structure for you that will also meet the MFRs.
- If your financial position changes significantly (e.g. NTAs decrease by 20% or you exceed your Maximum Revenue by 10%), you may be required to report that change to the QBCC.
- Understand your business structure and which legal entity owns the assets (e.g. sole trader, corporation, trustee).
- Monitor your income from all sources, not just building work or in Queensland, to ensure that you do not exceed your Maximum Revenue.
- If you receive a QBCC notice, seek accounting and/or legal advice as soon as possible to allow sufficient time to prepare your material in response.
If you need assistance implementing any of these tips, contact our team.
This article provides general information and should not be taken to be legal advice. Each contract and set of facts are different and therefore you should obtain specific legal advice.
If you have any questions regarding causes of delay or would like us to assist with your current or future contract, please do not hesitate to contract our team on (07) 3139 1874 or at firstname.lastname@example.org.