Saving iconic brand

News has broken that the troubled Patisserie Valerie chain is being bought out of administration after securing backing from investment firm Causeway Capital, saving 96 shops and almost 2,000 jobs. Patisserie Valerie was plunged into uncertainty back in October when serious accounting errors were uncovered. KPMG were brought in to try and save the iconic brand, but restructuring talks broke down and in January this year the company entered administration.

Black hole in accounts

This is the latest in a list of corporate insolvencies, the most high-profile of those being the collapse of Carillion in January last year. Patisserie Valerie moved swiftly from reporting they were holding around £30 million cash earlier in the year to the discovery of two undisclosed overdrafts totalling around £10 million and a black hole in their accounts of nearly £40 million. The auditors did not pick up on this or the thousands of false entries that were allegedly made in their company ledgers.

This is a story that will continue to rumble on for some time with the Serious Fraud Squad carrying out criminal investigations into the company and former finance director, and an investigation by the Financial Reporting Council into the firm tasked with auditing the company’s books.

Too big to fail

What does this, and other high-profile collapses mean for the suppliers? Looking at the cases of Patisserie Valerie and Carillion, we have learned that ‘they’re too big to fail’ and ‘they’ve been around for years’ (Patisserie Valerie opened its first shop in Soho in 1926) simply doesn’t stand up to any scrutiny. There is now more than ever, a need for any credit risk decisions to be made using the full range of tools available. This means looking at all of the information you can, company accounts, industry reputation, director’s history and record, product strategy potential, information from contacts and other trading partners, credit reference agency information, everything.

Use a collections agency

Huge companies collapsing can send shock waves and ripples through the business community that reach far and wide, from large corporations through to medium and smaller sized businesses. There are steps you can take to mitigate your risk by having robust systems in place. Partnering with an established and experienced collection agency is one way to do this. An agency like Daniels Silverman can help with all of your credit control, from large corporations to small businesses we ensure the timely payment of your invoices before they become a debt and work tirelessly on your behalf to protect your reputation and your relationships with your client base. As part of this service we run regular credit checks on the companies you deal with if we start to experience any regular late payments and will endeavour to sort any issues before they become a problem to your business.

No company is too large or established to fail, but we can work with you to help to mitigate any fall-out impacting your company.

To find out more about our highly efficient and ethical debt collection or credit management services, why not give us a call today, we would be happy to talk through your requirements and see how we can help.

https://www.danielssilverman.co.uk/contact/