Diageo and AB InBev payment controversy

Diageo and AB InBev have been criticised by the Forum of Private Business for imposing longer payment terms on their suppliers. Both companies extended their payment periods in January, adding to the pressure on small suppliers already affected by the economic downturn.

On 19 January, Diageo extended its payment period for all non-contracted suppliers to 60 days. Meanwhile, AB InBev told suppliers of services, spare parts and capital expenditure projects that from 1 January 2009 it was doubling its payment period to 120 days from the end of the month that invoices are received.

The FPB has contacted both companies to highlight the “critical” impact of payment delays for small businesses. It has also invited Diageo and AB InBev to sign up to the UK government’s ‘prompt payment code’, designed for companies to demonstrate their commitment to suppliers.

Phil Orford, CEO of the FPB, criticised the drinks suppliers, saying: “These two companies are attempting to claw back what they have lost as a result of the economic downturn by taking advantage of their dominant position in this sector at the expense of their supplier base”.

In return, Diageo released a statement to say that, “In the majority of cases, this is a maximum increase of 15 days”, observing that just 1% of its 25,000 global suppliers had expressed concern over the changes.

Gabriel Savage, 25.02.09