Some of the world’s biggest retail brands were embarrassed for taking months to pay smaller suppliers.
The biggest companies with a presence in the UK, including Bud Light maker AB InBev and bottler Coca-Cola, are taking more than 100 days to pay their suppliers, according to data latest report when paying bills through Good Business Pays.
The think tank behind the study warns that the slow payouts, which AB InBev insists only affect its larger suppliers, are likely to have a major impact on small businesses living hand to mouth and dependent on cash from multibillion-dollar companies.
Big companies take months to pay their bills
Belgian multinational brewing giant AB InBev was one of the biggest culprits for slow payments, taking an average of 117 days to pay its suppliers.
Nearly four out of every five invoices received by a beverage manufacturer went unpaid for more than 60 days.
Coca-Cola Europacific Partners, the European maker of Coca-Cola drinks, took an average of 107 days to pay its suppliers, while Cadbury owner Mondelez took 99 days to pay its bills.
Reckitt, the company that makes kitchen and bathroom cleaning products such as Air Wick and Finish, was the worst offender, taking an average of 126 days to pay suppliers.
All of these companies were labeled as “slow” rather than late, indicating that they tend to make payments according to a pre-agreed schedule, albeit a slow one.
“Supply, energy and now financial challenges have created the perfect storm for small businesses,” said Good Business Pays CEO Terry Corby.
“While all organizations face these pressures, small businesses feel them the most and most quickly.”
In 2017, the UK introduced a “duty to report” bill that would force large companies to disclose how long it took them to pay their suppliers.
While the initiative was intended to give suppliers more transparency before entering into a business agreement, it was expected to force large businesses to reduce the time it takes them to pay.
However, this does not seem to be the case.
Analysis by Good Business Pays found that in the five years since the duty to report scheme was introduced, the average time it takes large companies to pay bills has dropped by just one day to 36 days, | Times of London reported.
AB InBev strikes back
AB InBev is worth more than $100 billion, and European bottler Coca-Cola is worth more than $32 billion.
The scale of their operations means they often take longer to complete basic tasks, such as paying off debts. They also have significant cash flow and debt financing, which eliminates the short-term risks associated with recalcitrant customers.
Meanwhile, their UK suppliers are often smaller businesses with far less freedom to handle cash and are likely to feel the real impact of deferred payments.
In January 2022, the Federation of Small Businesses warned that 400,000 small firms were at risk of cash flow problems related to late payments from customers.
Good Business Pays said large firms were in “cash conservation” mode and had been paying small businesses for too long for things such as materials, transport and labor for work completed months ago.
AB InBev representatives did not immediately respond to Fortune request for comment.
This was announced by a representative of Coca-Cola Europacific Partners. Luck that its smaller suppliers were typically paid within 40 days and that it was moving to 30-day terms for UK suppliers.
“The strength of our relationships with suppliers is critical to the success of our UK business and we work closely with them to ensure appropriate payment terms,” the spokesperson said.
Responding directly to the Good Business Pays report, AB InBev said it was negotiating with firms on a case-by-case basis, adding that most of its slower payments were due to large suppliers.
The drinks maker said most of its smaller suppliers had payment terms of less than 60 days, and those that did were paid within that period in 2022.
However, Good Business Pays data shows that 11% of AB InBev invoices were not paid within the agreed upon time frame.