Diageo out of ‘hall of shame’

UK drinks giant Diageo has been removed from the ‘Hall of Shame’ after taking steps to speed up payments to small businesses.

The spirits producer was ‘inducted’ into the hall by the Forum of Private Business in January of this year after it was said to be considering increasing the time it took to pay suppliers from 60 to 90 days.

The move was met with uproar with warnings that Diageo would break the “backbone” of the UK economy.

As reported by the drinks business, in March of this year Diageo had already made a u-turn on its earlier announcement and said that no small or medium-sized business would have to wait the proposed 90 days until receiving payment.

The most recent news surrounding the company’s removal from the ‘Hall of Shame’, comes after the FPB’s managing director, Ian Cass, met with Diageo this month.

At the meeting, the company reiterated it was committed to a maximum 60-day repayment term small to medium businesses, “recognising the importance of small suppliers to themselves and the wider economy”.

Diageo also pointed out it had put in place a supply chain finance scheme where interest has been reduced from 1.5% to 1% above Libor and ensured there are “hidden extras” such as framework, supplier fees or discounts foisted on suppliers in order to market Diageo products.

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.”