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Forum to remove Diageo from the "Hall of Shame" PDF Print E-mail
Monday, 21 December 2015

The Forum of Private Business, a leading watchdog on poor payment practices for over a decade, has taken the decision to remove Diageo from the Hall of Shame.


The Forum feels that the company has taken sufficient steps to improve their payment terms since they were inducted into the Hall of Shame in January 2015.

In a meeting with the Forum’s Managing Director Ian Cass, the team from Diageo highlighted how they were supporting their suppliers and revealed that their standard terms for small firms were:

• Diageo has committed to a maximum 60 day term for SMEs in the UK recognising the importance of small suppliers to themselves and the wider economy.
• They have put in place a supply chain finance scheme where the interest has been reduced to 1% above Libor from 1.5% due to supplier demand. This was seen as a remedial measure for those on 60 day payment terms
• Response to any irregularities within a submitted invoice within 48 hours
• No hidden extras such framework, supplier fees or discounts forced on suppliers for the marketing of products etc.
• Diageo is a member of the Prompt Payment Code and undertakes their obligations as a signatory seriously. Diageo have provided the Forum with a list of suppliers to contact for an independent assessment of the supplier relationship and the Forum have also taking soundings from some of their own members.

“Clearly we needed a carrot and stick approach to late payment so that firms, once they have been put into the hall of shame then have the incentive to change their ways” explained the Forums Managing Director Ian Cass.

“We are working very closely with the Institute of Credit Management and other trade associations to work on non-regulatory methods to reinforce the supply chain, as we feel that this is a major advantage that Germany, for instance, has over the UK.

“That way the Government and the future Small Business Commissioner can focus on regulator improvements. For us making all businesses pay within 30 days (ideally at a European level) would make sense as our members have to pay HMRC and others within 30 days and getting its current suppliers to pay their supply chain fairly.”

Ruth Evans, Chief Executive, at the industry trade association BFBi put this into context by stating: “BFBi welcomes the removal of Diageo from the Hall of Shame, indicating the improvement in payment terms, in particular for small and medium sized businesses. The brewing industry benefits from the strong relationship afforded by many independent and regional brand owners with their supply chain. In recent years, many of the larger brewers have challenged the sustainability of the chain by increasing payment terms to levels of 120, 150 and even 180 days, which in turn puts pressure for others to follow. As one of the largest brand owners, Diageo is making a strong statement, which we hope others will follow.

"BFBi is concerned with the implications of InBev purchasing SABMiller. SABMiller is viewed, in general, as supporting a sustainable supply chain. However, the supply chain’s experience with InBev, in relation to payment terms is not positive.”
 
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