Patisserie Valerie admits late payment issues
14 Jan 2019
High street cake chain Patisserie Valerie, which is under investigation over accounting irregularities, has admitted it has problems over delays in payments to suppliers, after the business, energy and industrial Strategy (BEIS) select committee asked the company about its payment practices
14 Jan 2019
In response to a letter from the committee Nick Perrin, interim CFO, wrote: ‘You will be aware than in mid-October significant issues were identified in the Patisserie Holdings Group, in particular that the cash reportedly held by the business was significantly overstated.
‘It was identified that there were many creditors with a large backlog of unpaid invoices.
‘Significant funds were injected into the business to enable the group to bring payment up to date (this process is ongoing) and a new executive team has been put in place.’
Perrin said Patisserie Valerie generally agrees specific terms with its suppliers, covering more than 85% of purchases. Where these are not agreed, the standard terms are for payment within 45 days of supply, with the longest payment terms that have been agreed extending to 60 days.
However, he told MPs that sorting out payments was proving ‘a complex and time-consuming task’, partly because a large number of payments on account had been made. He estimated it would take six months before the company could provide representative data on average length of time to pay invoices and a breakdown of when payments had been made, as requested by the committee.
Rachel Reeves, chair of the BEIS committee, said: ‘This response from Patisserie Valerie suggests that the new management are trying to clear up the mistakes of the past and get to grips with late payments to suppliers.
‘They have promised updated details on payment practices in six months and we shall hold them to that timescale. It is vitally important for small and medium-sized enterprises (SMEs) that they are paid fairly and on time and it is an indictment of the government’s current reporting requirements that firms are allowed to evade their obligations to report on their payment practices and to do so without penalty or further effective scrutiny from the small business commissioner.’
Report by Pat Sweet