Who Keeps the Accounts Receivable When You Sell Your Business?
Here is a question that surprises a lot of sellers during their first offer review: who keeps the money customers still owe the business? Accounts receivable, the invoices your customers have not paid yet, can add up to real money, and whether you or the buyer keeps it is a point that has to be settled clearly in the deal. Here is how it usually works and what to watch for.
The default: the seller keeps the receivables
In most small business asset sales, the seller keeps the accounts receivable that existed as of closing. The logic is simple: you did the work and earned that revenue before the sale, so you collect it. The buyer starts fresh, keeping the money from sales they make after they take over. This is the most common arrangement, but it is not automatic, which is why it must be spelled out in the purchase agreement.
When receivables are included in the sale
Sometimes a buyer wants the receivables included, especially if collecting them is central to running the business smoothly. When that happens, the value of those receivables is usually added to the purchase price, and the deal accounts for the risk that some invoices may never be collected. If receivables are part of the sale, expect the buyer to scrutinize their age and quality, because a ninety-day-old unpaid invoice is worth less than a fresh one.
Plan your final collections
If you are keeping the receivables, think about how you will collect them after you no longer control the business. It helps to agree with the buyer on how post-closing payments from customers will be handled, since checks may still come in addressed to the company. A simple written understanding prevents awkward disputes over a payment that lands a week after closing.
Do not forget accounts payable
The flip side of receivables is payables, the bills your business still owes. Just as you typically keep what you are owed, you typically remain responsible for what you owe as of closing. Matching these up, what comes in versus what goes out, is part of getting a clean break. I make sure both sides are addressed so nothing gets missed.
Get the details right
Receivables and payables are the kind of detail that is easy to overlook until it costs you. I help sellers handle them cleanly so you collect what you earned and hand over exactly what you agreed to. The first conversation is free and completely confidential. Call me at (904) 735-8994 or get in touch here.
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