Dropped from code

Diageo and Unilever ‘fail to pay suppliers on time’

whisky bottles Diageo
Diageo produces Scotch whisky, Guinness and Gordon’s gin (pic: Terry Murden)

Two blue chip companies have been reprimanded by the government’s small business commissioner for late payment to suppliers.

Household products group Unilever UK and four business units of drinks company Diageo have been removed from the Prompt Payment Code for “failing to honour their commitment” to pay suppliers within the agreed time frame.

Liz Barclay, the small business commissioner, said Diageo and Unilever could have withdrawn voluntarily from the programme but “have not engaged” with her, so were delisted

The voluntary code requires companies to pay 95% of invoices within 30 days to their small suppliers and pay 95% of all invoices within 60 days. 

All five companies have had the opportunity to voluntarily withdraw their Code membership but have not engaged with the Small Business Commissioner who runs the PPC on behalf of the Department for Business, Energy and Industrial Strategy.  

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Latest Payment Practice Reporting data highlighted that Diageo Scotland was paying 42% of invoices within 60 days. Diageo Global Supply was the worse, paying just 32% within the time frame and Diageo Northern Ireland almost as bad, paying 33%, while Diageo Great Britain paid 36%. Unilever UK paid paying 51%.  

Ms Barclay added: “It’s always disappointing when a company can no longer reach the payment standards set by the Prompt Payment Code. 

“The Code is there to make sure that suppliers get paid as quickly as possible and when firms leave or are removed there is a risk that payments to suppliers will be slower. 

“We will work with the firms mentioned to get them back onto the Code as quickly as possible should they wish to return, because that’s to the benefit of the suppliers and to the companies themselves”.  

The Government has set a standard of 95% of all supply chain invoices to be paid within 60 days for organisations who want to do business with government. Suppliers who do not comply with this standard could be prevented from winning government contracts.

Small Business Minister Paul Scully said:  “As our small businesses recover from the pandemic, the last thing they need is for some big firns to hold back the cash that is owed to them. 

“I urge the companies that have been removed from the code to get their acts together to improve their performance.” 

The PPC Compliance Board, said: “The removal of these companies from the Code demonstrates that we will crack down where we find that signatories are not paying suppliers on time.

“We want to see all Code signatories adhering to the commitments they’ve sign up to and to see continual improvement in payment behaviour”. 

The PPC Compliance Board comprises Andy Chamberlain (iPSE), Mike Cherry (FSB), Elizabeth Crowhurst (CBI), Senior Civil Service representative of Business Growth Directorate in BEIS, Yvonne Gale (Chair), Suren Thiru (British Chamber of Commerce), Martin Traynor (Cabinet Office), Iain Wright (ICAEW).

Diageo said: “We have taken action, over several years, to improve payment practices and have applied an acute focus to SMEs. We are disappointed by this announcement but will continue to focus on what we believe to be the original intent and spirit of the code.”

Unilever said it was “proud to be one of the first to sign up to the [code]. Our payment terms have not changed and it is the [code] criteria that has changed. We are committed to paying all of our suppliers fairly and on time.”

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