Accounting records highlight the performance of your business, financial health, and how it is expected to perform in the future thanks to cash forecasts.
Evidence of growth potential – Cash flow forecasts can help assess the financial potential of your business and track scope for growth, a valuable talking point when conversing with interested parties. A business with evident growth potential, supported by a steady upturn in sales and consumer demand can help tip the scales in your favour in a competitive market.
Back up your claims with numbers – Provide evidence where potential buyers may be sceptical. If your business is on track to exceed targets or it survived the likes of the coronavirus pandemic with minimal disruption to trade, support your claim by using financial records to illustrate this.
Transparency can spark honest conversation - Maintain up-to-date accounting records, regardless of the performance of your business as this upholds high standards of transparency and can stimulate productive conversation amongst potential buyers.
This can provide a conversation gateway to address buyer concerns, such as lulls in trade, or Covid-19 distress that may have interrupted an otherwise exceeding track record. Failure to disclose such information to an interested buyer at an early stage could result in the deal subsequently falling through after the due diligence stage.
Due diligence checks are conducted as standard to back-up claims and expose red flags, such as legal action from creditors. These checks are performed by both parties to measure the level of risk associated with the business and the individuals involved.
Calculate the true value of your business – When conducting a business valuation, a business valuer will request to see company accounts to calculate how much your business is worth. This information must be kept up to date to accurately calculate the value of your business.