The 45-day timeline for Guyanese contractors to be paid by oil companies is still seen as too lengthy, so the government is looking to reduce this.
The payment timeline was initially 90 days; then it was reduced to 45 days after the receipt of a correct invoice for payments to local suppliers. That timeline has been deemed too long by President Irfaan Ali, as concerns are still being raised by local suppliers.
“Financing is [still] an issue, so if they [contractors] are not paid within a particular time, it basically pushes them out of the sector. They don’t have the resources to continue. So, we are trying to get it down, maybe below 30 days,” Minister of Natural Resources, Vickram Bharrat said at a Jan. 14 press conference.
Local suppliers have long objected to these extended timelines, citing cash flow challenges and access to finance.
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ExxonMobil Guyana Limited’s President, Alistair Routledge, had indicated that they are looking at an option for fast-tracking payments. He stated that the solution under consideration is the implementation of invoice factoring. This financial mechanism allows businesses to sell their invoices to third-party financial institutions at a discount, thereby obtaining immediate cash flow without incurring additional debt.
Routledge said by collaborating with financial institutions, Exxon can provide companies with an option to access funds as soon as a valid invoice is submitted.
