Latte payments - café chain Patisserie Valerie’s delayed payments
Troubled UK café chain Patisserie Valerie has been revealed to have been paying its vendors late, which is a sharp contrast to the advice in the columns chairman Luke Johnson was writing in newspapers about paying suppliers on time.
Johnson had been having his business columns in The Sunday Times and the Financial Times published advising on the treatment of suppliers. He wrote as far back as in 2013: "Few companies survive in the long run if they rip off the public, screw suppliers or treat employees badly."
He particularly made a point about paying suppliers on time in 2016 in The Sunday Times: "It is often the more mundane aspects of business that matter most — like getting paid. You can manufacture the most fantastic products in the world, but if you do not receive the money you’re due, then you will surely go bankrupt," in an article titled "Nothing matters more than getting customers to pay".
So far, Brakes, a catering supplier, and Booker, a food cash and carry business now owned by Tesco, have both refused to provide goods to Patisserie Valerie for not keeping its credit account up to date.
One small photography business was paid only this month after a two-year wait, while another supplier turned up at the company’s office with baseball bats, according to a source cited by The Times.
Patisserie Valerie, co-founded by Johnson, operates about 200 outlets in Britain. It was floated on London’s AIM stock market in 2014.
Back in October it nearly collapsed after the discovery of accounting irregularities. It was announced that the company had a £40 million hole in its accounts. It also revealed in the same month that it had debts of £9.8 million rather than the cash position of £28.8 million it had reported in May. This led to the suspension of trading in its shares and the arrest of Chris Marsh, its chief financial officer.
The company has appointed a new interim CFO, while its chairman Luke Johnson provided a £20 million loan to save the company.
It also revealed that it had received a winding up petition from HM Revenue and Customs over an unpaid tax bill of £1.14 million, filed in September. Besides being investigated by the Serious Fraud Office, the audit of the company’s accounts by Grant Thornton over the past three years are being investigated by the Financial Reporting Council.
What is shocking about this is that a company can suddenly declare a £40 million hole in its accounts. And that it suddenly declared such an overdraft, rather than the positive cash position it had reported earlier.
Although it would be difficult to become aware of the accounting irregularities in the company, suppliers who had checked the company in a database like Riabu would have found out its sketchy payment record and be able to avoid future headaches by refusing to provide goods and services to it.
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