Diageo working to improve pay practicesBy Nicola Carruthers
Smirnoff owner Diageo said it was ‘very focused’ on improving its payment practices after it was suspended from a UK government-backed programme for failing to pay suppliers within 60 days.
On 1 November 2019, Johnnie Walker owner Diageo was among 20 companies to be suspended from the UK government’s Prompt Payment Code (PPC).
Businesses signed up to the voluntary Code pledge to pay 95% of all supplier invoices within 60 days. The programme aims to ‘end the culture of late payment’.
The Office of the Small Business Commissioner, which manages the Code, said: “We can confirm that Diageo [and Unilever] were suspended from the Prompt Payment Code in November 2019, following their reported payment data reflecting that they had not met the Code requirements. We would need to see an improvement in their payment practices for them to be reinstated to the Code. We are actively engaging with both companies concerning their continued association with the Code.”
Businesses that fail to meet the Code’s commitments are removed, and only reinstated when an appropriate remedial plan has been approved by the PPC’s Compliance Board.
A Diageo spokesperson said: “All SME’s working for us in the UK are on 60-day payment terms and 97.7% are currently paid to terms. Larger suppliers are often on multi-year contracts involving mutually agreed payment terms.
“We are very focused on the continual improvement of our payment practices and have introduced several measures to reduce process errors. We had agreed a clear action plan with the PPC and are working to this, while also reviewing their recent reforms.”
Earlier this month, Diageo avoided paying a potential £277 million (US$385.2m) in tax liabilities, following HMRC’s decision that the firm did not receive illegal state aid.