The Forum of Private Business, a UK watchdog on poor payment practices, has taken the decision to remove Diageo from its “Hall of Shame” due to improvements in the spirits group’s payment rules.
The Forum said it 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.
Diageo stressed to the forum’s MD Ian Cass that their standard terms for small firms now included a maximum 60 day term for SMEs in the UK, a commitment to respond to irregularities within 48 hours and establishing a supply chain finance scheme where the interest has been reduced to 1% above Libor from 1.5% due to supplier demand.
The firm is also a member of the Prompt Payment Code and said its supplier payment terms contain no hidden extras such framework, supplier fees or discounts forced on suppliers for the marketing of products.
“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 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.”
Other food and drink firms currently in the forum’s “hall of shame” include Carlsberg, Premier Foods and Mars.