Diageo backs down on supplier payment terms

Drinks giant Diageo has given up on its plans to extend its supplier payment terms.

The Smirnoff and Guinness owner wanted to lengthen the time it takes to pay its suppliers to three months, but faced strenuous objections from business groups including the Forum of Private Business.

But the FTSE 100 group now acknowledged the importance of small and medium-sized suppliers "to the UK economy and to the sustainability of our own business" and promised to settle its bills within 60 days for UK SMEs.

“We want to clarify that our standard supplier payment terms have not changed and no supplier would be required to move to longer payment terms in order to secure future business," said Diageo's supply and procurement David Cutter.

"We continue to take an open and flexible approach when reaching agreements with suppliers and tenders based on existing terms will continue to be accepted."

The government has pledged to toughen up its ‘prompt payment code’ (PPC), with companies that break terms by pressuring their supply chain removed from the scheme.