Some Peacocks suppliers are owed millions of pounds in late payments from finance company Tradewind, Drapers can reveal, although the value retailer has offered to pay those affected directly.
A number of suppliers told Drapers that payments are more than 30 days overdue, with several owed more than £1m. Peacocks has offered to step in and pay suppliers directly if they have not been paid by Tradewind on time.
It comes after the value retailer, owned by Edinburgh Woollen Mill’s Philip Day, changed its payment terms for suppliers in January. It opted to change standard terms and process all payments through Tradewind, which charges suppliers a fee of 2.25% on each invoice. Suppliers are paid in seven to 10 days by Tradewind, and Peacocks then pays Tradewind within 130 days. Currently, suppliers to Peacocks are on various different standard terms from 90 days upwards.
A spokesman for Peacocks said: “A percentage of our suppliers are paid by third-party factoring company Tradewind. Tradewind has a contractual relationship with these suppliers, where they receive and then pay these suppliers’ invoices. As the relationship is between Tradewind and these suppliers, Peacocks itself has no control over the speed of payment, although we have an expectation that these suppliers will be paid reliably and promptly.
“We have been made aware that some invoices have not been processed by Tradewind in a timeframe that we consider reasonable. Peacocks has paid all its invoices to Tradewind on time and we are fully up to date. In fact, there is currently $5m of surplus funds in our credit facility with Tradewind.
“Our relationship with our suppliers is fundamental to our business and we always seek to provide our partners with quick and simple payment. If suppliers have not been paid by Tradewind on time, Peacocks is more than happy to step in. As the contractual relationship lies between Tradewind and the supplier, we would, however, need a copy of an up-to-date invoice and written confirmation that we were not as risk of paying an invoice twice.”
He added: “We are now having weekly discussions with Tradewind about the speed of payment, having asked them to provide us with firm reassurances that this will not occur again and that action is being taken to identify the cause of the delays.
“Peacocks is in an incredibly strong financial position and maintains a triple-A covenant with the banks. Peacocks is part of The EWM Group, which has one of the strongest balance sheets of any retailer in the UK. It has a significant cash balance, no external bank borrowings and undrawn committed bank facilities of £100m.”
Around 40% of Peacock suppliers currently use Tradewind or a similar finance provider. When the retailer introduced the new payment terms, it argued the move would allow it to simplify payment processes across the business and unify terms across its suppliers.
However, Peacocks suppliers have told Drapers they are frustrated with the service.
”Suppliers aren’t being paid,” one Peacocks supplier said. “We are owed more than a million pounds. [Tradewind] say on a daily basis that we will be paid, but they haven’t paid us. What’s worse is that no one picks up the phone – it’s just silence.”
He added: “Peacocks is a large customer to us, if we aren’t able to get paid then we will have survival issues.”
Another Peacocks supplier said he was thinking of cutting ties with the firm: “Many suppliers I’ve spoken to are thinking about pulling the plug on Peacocks. We are owed millions. They need to be giving us our money on time.”
A Tradewind spokeswoman said: “Tradewind GmbH values our relationship with Peacocks and their suppliers. We are working with Peacocks’ suppliers to improve coordination with the intention that their best interests are protected and none are left behind going forward.
“In our business, there are terms and conditions suppliers have to meet to enable us to disburse funding and sometimes it happens that invoices are rejected for commercial reasons that are not determined by Tradewind but based instead on a general set of screening guidelines for the industry.
”We look forward to continuing to build a deep and longstanding relationship with Peacocks’ suppliers and will work closely with Peacocks on improved communication to ensure all suppliers get paid on time going forward.”
Drapers has contacted Tradewind for comment.