How Are Accounts Payable/Receivable Normally Handled In The Sale Of A Business?
Reviewing Financials
June 28, 2005

Question:

What is a common practice for dealing with accounts payable/receivable when purchasing a business?

Answer:

In nearly all small business sales, the seller will retain the cash and accounts receivables, they will pay off the payables, and deliver the business “free and clear” to you.

In larger purchases, the buyers will likely acquire these balance sheet items to provide them with immediate working capital. However,

unless it is an especially large or complicated deal, you will usually not take the AR at closing.

With this being the norm, be certain that you have ample working capital available.

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