Prompt payment: how do food and drink manufacturers compare?

Many of the UK’s biggest food and drink manufacturers are still exceeding the recommended 60-day limit set out by the Prompt Payment Code, the data suggests. Of the companies we looked at, only Yoplait, Unilever and Weetabix paid their suppliers in 60 days or less during their most recent reporting period.

Booze manufacturers were among the worst performers in terms of the number of days it took them to pay, with AbInbev (120), Molson Coors (80), Diageo (78) and Heineken (78) all taking significantly longer than 60 days to pay suppliers.

Most food and drink manufacturers reduced the percentage of invoices paid outside their agreed terms versus a year ago, with the exception of Yoplait and Walkers. Hovis was the worst performer, with 60% of its invoices paid outside of agreed terms, according to its latest report – although that’s a 23% improvement on the same period a year ago.

What food and drink manufacturers say about their payment terms:

Some food and drink manufacturers have committed to paying their smaller suppliers promptly, while others are working hard to improve their payment terms in general. Here’s what they had to say:

AB InBev UK: “We welcome the government’s disclosure requirements on payment practices. We work with our suppliers on an individual basis, negotiating a number of terms, including payment terms, that suit both parties in the long-term. Our latest reported figures are from June-December 2019. 

“Our average time to pay an invoice is driven by large businesses and intracompany payments making up 83% of invoices over this reporting period. The average payment figure relates largely to these suppliers, as small and micro suppliers contributed to 8% of invoices. 

“We have also changed our payment terms for micro, small and medium suppliers, and have now moved our small and micro suppliers to 60-day payment terms. 

“We are also working to cut late payments to under 10%. These currently stand at 14% and are moving in the right direction, however the majority are driven by intracompany payments – when these are removed the proportion stands at about 5%. Of these, the main driver is invoicing issues, which we are working to improve as we move to e-invoicing. 

“We want to continue working with our suppliers and business partners to support them, and if a supplier’s circumstances change, making the agreed payment terms no longer viable, we encourage them to speak with us and changes can be made. We look forward to continuing to update on progress in this area.”

Britvic: “Britvic is a responsible business, committed to fair treatment of suppliers and ensuring they have a positive experience of trading with us. During the pandemic we have worked with some of our smallest suppliers and agreed to accelerate our payments where needed. 

“Looking back to our figures for the period 30 September 2019 to 31 March 2020, our average time to pay has improved for the second consecutive reporting period, going from 73 to 69 days. We realise there is more to be done and are looking at how we can improve our current processes and continue to support our suppliers.”

Kellogg’s: “We are confident Kellogg’s payment terms are in line with the practices of many other similar sized businesses. We remain committed to our suppliers, who are vital for the success of our business, that’s why we offer early payment options which enable our suppliers to receive payment in as little as 10 days to help them manage their cashflow.”

Unilever: “Unilever is fully committed to paying all our suppliers fairly and on time, with all our payment terms mutually agreed up-front. For our smaller suppliers, SMEs and charities we have payment terms of 30 days. At the end of 2019, the average time taken to pay invoices for Unilever UK was 60 days and we paid more than 96% of our invoices on time.”

United Biscuits: “United Biscuits (UBUK) operates standard payment terms of 75 days. However, we work with our suppliers to find a suitable set of commercial terms that may be shorter or longer, that are acceptable to both businesses. For example, we have shorter payment terms for our smaller suppliers, and we have temporarily reduced the payment terms to some suppliers to support them during the coronavirus pandemic.”