What is minimum financial requirements?
Meeting minimum financial requirements (MFR) ensures a contractor-type licensee has a financially sustainable business and appropriate level of working capital.
The Minimum Financial Requirements (MFR) Regulation was introduced in Queensland on 1 January 2019 to reduce financial failure, liquidations and bankruptcy within the building and construction industry and ensure that people are paid for their work. It is part of the QBCC's remit to build a stronger, fairer industry.
The regulation outlines what minimum financial requirements must be met to ensure a contractor-type licensee has a strong and financially sustainable business with an appropriate level of working capital. The QBCC sets a contractor's:
- allowable annual turnover—maximum revenue
- as determined by their working capital—net tangible assets
- in relation to their debts—current ratio.
The QBCC requires most contractor-type licensees to demonstrate this financial viability when they apply for a contractor-type licence and through regular reporting of their finances.
If an applicant or licensee cannot meet the minimum financial requirements of a contractor-type licence in a particular class, then they can look at other options for working in the industry that do not include financial reporting obligations. Contractors in some classes are exempt from providing financial information.
To determine your financial reporting obligations, you need to establish your maximum revenue category.