Julia Irvine 11 Jan 2019 11:28am

Patisserie Valerie's invoice payment chaos

Patisserie Valerie’s interim CFO has admitted that he is having to contend with a large backlog of unpaid invoices and that it may take six more months before the system is back to normal

In a letter to Business, Energy and Industrial Strategy Committee chair Rachel Reeves, Nick Perrin reveals that he has inherited a system in chaos from the previous executive team which means that he is unable to produce data on the group’s payment practices.

“The group recognises its responsibilities to suppliers and is determined to correct the historical position,” he writes.

“This is a complex and time-consuming task. We are gradually ensuring that overdue payments are made and that terms agreed with suppliers are adhered to, but there remains much to do to complete the task.”

Perrin was responding to a request from Reeves demanding to know why Patisserie Valerie had not published any reports on its payment practices and asking for information about its payment terms.

In his response, Perrin says he is unable to explain why the previous management did not publish the reports since they have now left the business. However, he admits that it is not currently possible to calculate the average length of time taken to pay invoices, how many invoices are paid within agreed time terms and how many are paid late.

“The main reason for this is that a large number of payments on account have been made, making it impossible to state when any particular invoice was paid,” he adds.

Last October, the troubled café chain shocked the market when it suspended its shares and its CFO, Chris Marsh, and revealed that it had uncovered accounting irregularities that had led it to significantly overstate its cash position.

Marsh has now left the company as has chief executive Paul May. The group has replaced them with experienced turnaround specialists, including Steve Francis as chief executive, and Perrin as interim CFO.

It has brought on board Jeremy Jensen as a non-executive director and chair of the audit committee. He is an experienced financial and managerial trouble shooter with a strong track record of success in rescuing and turning around large complex organisations.

It has also replaced auditors Grant Thornton with RSM