Five firms kicked off Prompt Payment Code after failing to pay on time

Five major companies have been formally removed from the Prompt Payment Code (PPC) after failing to honour their commitments.

The companies are: Diageo Scotland, Diageo Global Supply IBC, Diageo Northern Ireland, Diageo Great Britain and Unilever UK.

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 (SBC) who runs the PPC on behalf of the Department for Business, Energy and Industrial Strategy, a statement from the SBC said.

Latest Payment Practice Reporting (PPR) data highlighted that:

  • Diageo Scotland were paying 42% of invoices within 60 days
  • Diageo Global Supply IBC, were paying 32% of invoices within 60 days
  • Diageo Northern Ireland were paying 33% of invoices within 60 days
  • Diageo Great Britain were paying 36% of invoices in 60 days
  • Unilever UK were paying 51% of invoices within 60 days.

SBC Liz Barclay said: “It’s always disappointing when a company can no longer reach the payment standards set by the PPC.

“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 firms 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, made up of 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), said: “The removal of these six 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 signed up to and to see continual improvement in payment behaviour.”

The UK Government announced in November 2018 that from 1 September 2019, any organisation that bids for a central government contract more than £5m a year will need to demonstrate it has effective payment systems in place to ensure a reliable supply chain.

The SBC is an independent public body set up by government under the Enterprise Act 2016 to tackle late payment and unfavourable payment practices in the private sector. The SBC covers the whole of the UK – England, Wales, Scotland and Northern Ireland.

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