Tesco late payment hits headlines
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Photo Credit: Ian Muttoo via Compfight cc

Tesco have been making headlines for the wrong reasons recently, most famously with their accounting error that saw them overstate their financial position by a quarter of a billion pounds in a recent financial update.

 

 

But at the other end of the retail giant’s financial scale, one small business has cut off supplies over an unpaid £6,000 bill – highlighting the extremes that exist within the retail industry supply chain.

 

Moo Free manufacture dairy-free and gluten-free chocolate, and were thrilled initially to receive orders from Tesco worth around £2 million, twice the company’s current total sales.

 

However, the working relationship did not feel right from the outset, and co-founder Mike Jessop took the decision to only send a quarter of the initial £70,000 shipment.

 

In return, Tesco sent partial payment, but with a shortfall of around £6,000 – so Moo commenced recovery proceedings.

 

Mr Jessop told local news site Get Reading: “We don’t have late payers normally, so did the normal things and sent emails and got promises it was all going to be paid.”

 

By November, when the money was due, it still had not been received, forcing the company to use savings intended for investment in new machinery to cover employees’ Christmas wages.

 

In January a statutory demand was issued, giving Tesco 14 days to pay in full, but this was ignored too, and at the end of March Moo’s solicitors contacted Tesco to inform them that a winding-up petition would be issued.

 

Within two days, payment was received in full, with Tesco blaming the five-month delay on “an administrative error”.

 

Although the cash flow interruption caused significant difficulty for Moo, the company is now looking to the future, having secured bank funding from Santander to take on 20% more staff and invest in new machinery.

 

Co-founder Andrea Jessop told Get Reading: “We are delighted to be able to invest in new machinery and increase staff levels, as this is a tangible indication of the fast growth of Moo Free.”

 

If you’re struggling with unpaid invoices, get in touch with our expert debt recovery team today to see how they can help you and your business.

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