In a meeting with the Forum’s managing director, Ian Cass, the team from Diageo highlighted how it was supporting suppliers and said its 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”.
- •It has 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 its obligations as a signatory seriously.
Cass said: “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.”
He added: “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
The Hall of Shame can be found at https://www.fpb.org/your-voice/hall-of-shame
