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Fisker loses millions of dollars in customer payments for months

TechCrunch has learned that Fisker temporarily lost millions of dollars in customer payment records as it scaled up deliveries, leading to an internal audit that began in December and took months to complete.

The electric vehicle startup was eventually able to track most of the payments or request new payments from customers whose payment methods had expired. But three people familiar with the internal payments crisis described to TechCrunch the chaos, which has taken employees and resources away from Fisker’s sales team just as the company tries to save itself by restructuring its business model.

People familiar with the matter said it was difficult for Fisker to keep tabs on the transactions, which included down payments and in some cases the full price of the vehicle, because of lax internal procedures for tracking them. In a few cases, it delivered vehicles without collecting any form of payment at all, they said.

A source familiar with the matter told TechCrunch that “the checks were not cashed on time or were simply lost entirely.” “Months after a vehicle is sold, we’re often scrambling to find checks, credit card receipts and any wire transfers of funds.”

In addition to the internal audit, outside auditor PricewaterhouseCoopers has asked Fisker to provide more documents about its car sales as part of the process of preparing the company’s annual financial report, according to two people familiar with the matter. Fisker frequently failed to provide satisfactory documentation, leading PwC to make more demands.

“The documents that were collected were not always collected or sent to the same place,” another person familiar with the matter said.

The sources requested anonymity because they were not authorized to speak to the media about internal matters.

This internal confusion prevents the company from saying exactly how much revenue it generates, people familiar with the matter said, citing it as one of the reasons Fisker has yet to file its annual financial report for 2023.

Tracking payments may ultimately bring little comfort to the startup, which is on the brink of bankruptcy. Fisker has suspended production of its only car, the Ocean SUV, after having trouble meeting internal sales targets and struggling to support customers through a series of quality issues. The company has warned investors that it may not be able to continue operating without a new cash infusion.

This week, the New York Stock Exchange suspended trading in Fisker’s stock and delisted the company, raising the possibility that it won’t be able to raise capital to survive. On Wednesday morning, the company slashed prices on its remaining inventory by as much as 39%.

Representatives for Fisker and PwC did not respond to requests for comment.

red flag raised

Fisker has been warning investors since last year about issues with its internal accounting practices. In November, the company reported that it had discovered multiple “material deficiencies” in its internal financial reporting.

The company initially said it lacked “a sufficient number of professionals with appropriate accounting knowledge, training and experience to properly analyze, record and disclose accounting matters in a timely and accurate manner.”

The statement comes after two chief accounting officers resigned within a month. “Specifically, there were insufficient controls in place to ensure that the accounting department always received complete and adequate support, documentation and information and that issues were resolved promptly and effectively,” the company wrote at the time.

In the same filing, Fisker revealed a second material flaw involving “the risk of material misstatement in the accounting of inventory and related income statement accounts.”

On February 29, Fisker acknowledged in a press release that it had discovered another significant flaw in “revenue and related balance sheet accounts.”

The legalese is Fisker’s way of acknowledging what sources told TechCrunch: it simply doesn’t have the people or processes in place to properly assemble its books.

Fisker’s poor internal procedures also caused problems beyond tracking payments.

The company has also struggled to keep up with payments to state DMVs as it builds new customers, people familiar with the matter said.

This resulted in at least dozens of customers spending months using temporary license plates. Some car owners have had to trouble the company to buy multiple sets of temporary license plates because they keep expiring. The same is true for some property owners who have been waiting for titles and registrations.

Fisker hired contractors in February to help with title and registration issues, but the backlog is huge, according to people familiar with the matter. The team is revising order documents dating as far back as August 2023, one of the people said.

“The infrastructure was not in place before the sales machine was started,” one person familiar with the matter said.

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