IPSE, the Association of Independent Professionals and the Self Employed, has described new revelations about drinks giant Diageo’s payment practices as “scandalous”.

The Times reported that the British company had informed winners of new contracts that they will now have to wait 90 days to receive payment instead of 60. The drinks colossus, whose brands include Smirnoff, Guinness, Baileys and Johnnie Walker, justified the decision on the basis that it needed to improve its cash flow and drive out costs as it had “significant investment projects underway”.

The news comes after a recent Financial Times revelation that Heinz was extending its payment terms to 97 days and AB InBev, the largest beer company in the world with brands including Stella Artois and Budweiser, had extended its payment terms to a shocking 120 days.

IPSE’s policy and external affairs adviser, Jordan Marshall, called for urgent action to prevent these actions by large companies happening in the first place, arguing that they have a disproportionately negative impact on small and micro business suppliers, whose very survival depends on cash flow.

These suppliers, of course, include many in the professional contracting community, including Umbrella Company employees. If Umbrella Services are forced to wait for extended periods for payment, their role in providing Revenue-compliant, PAYE self-employed payroll services to contractors could be undermined.

Mr Marshall endorsed the Conservative Party’s proposals for a low-cost conciliation service to small businesses and the Labour Party’s proposals for tougher financial penalties for late payment. He called for automatic fines of up to 10% whenever payment has not been received after 60 days and for interest to be charged.

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