Drinks giants criticised over payments to SMEs

A business group has criticised two major drinks suppliers for lengthening their payment periods for SME suppliers.

The Forum of Private Business (FPB) claims that Diageo, the brewer behind Guinness, has extended to 60 days the period after which it pays smaller suppliers.

The FPB also says that the world's largest brewer, Anheuser-Busch InBev, doubled its payment period for services and small parts suppliers - to 120 days beyond the end of the month in which the invoice was received.

The FPB has written to both companies highlighting the damage late payment can do to SMEs, and asking them to sign up to the Government's Prompt Payment Code.

"The UK's economy is in recession, and many small businesses are struggling to secure credit in order to maintain any kind of cash flow," said FPB chief executive Phil Orford. "In these circumstances, not being paid promptly and in full can be critical to businesses."

A UK spokesperson for InBev, which merged with Anheuser-Busch last July, said: "The challenging global economic environment has resulted in InBev UK – like many other multinational companies - reviewing its terms and conditions of payment."

Quoted in the Financial Times, a spokesperson for Diageo said that the extension would add a maximum of 15 days to the standard payment terms for non-contracted suppliers.

The Government launched the Prompt Payment Code in December last year, in a bid to tackle late payments. However, a recent poll by the Federation of Small Businesses suggested that over a third (36%) of SMEs are waiting longer for private sector payments than before the code came into effect.

Research last year by payment clearing service Bacs found that 83% of SMEs are not exercising their right to charge interest on late payments under the Late Payment of Commercial Debts Act 1998. Bacs is due to release new statistics on late payments next week.