Investors Capital also scored well in accounts receivable because receivables are paid in less than 30 days a far cry from the 90 days companies that have to deal with big chain retailers typically wait. When they move on to the liabilities side of the balance sheet, investors zero in on the accounts payable section. Specifically, investors want to know how many payables are more than 60 days old. If it s a significant amount, it can be a problem, says Twaddell, because investors will see a significant portion of the proceeds being eaten up just to keep vendors happy. That can be a real deal-breaker.
Investors also look for any term loans.
In general, says Twaddell, their comfort with the loans varies directly with the term. Therefore, if you have significant liabilities due in one or two years, the investor may recoil. If the term is three to five years, the loans will be less of an issue. Debt-free Investors Capital had the ideal scenario. Any term loans payable to founders cause problems for entrepreneurs who aren t flexible.