The company will be working with Profectus, the specialist audit group, to review payments made to suppliers, citing concerns over income discrepancies.
Dirk Verwohlt, head of audit and risk at Pacific National, said there had been an audit of the company, leading to the new developments.
According to the Financial Review, he reportedly provided suppliers with Pacific National’s banking details and said refunds might need to be made. According to the article, Pacific National is looking into whether some people might have been paid twice for the same invoice. Longtime suppliers have said they weren’t contacted about an audit in the years past.
Pacific National told C2FO that it would no longer require its services by the end of June. The article also noted that Pacific National takes up to 45 days to pay suppliers and that its partnership with C2FO was intended to offer early payments of invoices for suppliers. Pacific National had offered the service for the past three years — but only a few suppliers had taken them up on the service.
“Where this has occurred, Pacific National has paid the supplier directly without the use of any third-party supply chain finance,” a spokesperson said, according to the article. “In January 2021, we made a commercial decision not to renew the contract with C2FO due to the limited uptake from our suppliers. The contract with C2FO is due to end mid-2021.”
The company has posted losses for the past two years, with a $339 million net loss for the 2019-2020 financial year.
According to a 2019 Moody’s Investors Service report, supply chain finance could actually be harmful to liquidity. Moody’s wrote that users of financial statements could be unaware of customers using reverse factoring and that the customers themselves may not understand the ramifications.