Stratford-upon-Avon
13 The Courtyard
Timothy's Bridge Road
Stratford-Upon-Avon
Warwickshire CV37 9NP
Before you agree to buy a business, it is essential to carry out due diligence. This means carefully checking the facts and risks so that you can make an informed decision. Here is a basic checklist to guide you through the process.
1. Review financial records
Ask for at least three years’ worth of accounts, including profit and loss statements, balance sheets, and tax returns. Make sure the figures are consistent and professionally prepared. Check for signs of financial difficulty, falling profits, or unusual expenses.
2. Check VAT, PAYE and tax compliance
Request confirmation that the business is up to date with VAT, PAYE, Corporation Tax and Self-Assessment filings. Ask to see HMRC correspondence and payment records to ensure there are no outstanding liabilities.
3. Look at cash flow and working capital
A profitable business may still have cash flow issues. Review recent bank statements, aged debtor and creditor reports, and understand how money flows in and out of the business.
4. Understand what is being sold
Clarify what you are buying – assets, goodwill, stock, customer lists, contracts, premises, or an entire company. Make sure the seller has legal ownership of these and that contracts can be transferred.
5. Review key contracts and agreements
Look at customer contracts, supplier terms, leases, loans, and employee contracts. Check for clauses that may affect your ability to continue trading in the same way after purchase.
6. Investigate legal matters
Ask if there are any ongoing legal disputes, unpaid claims, or employment issues. You may need a solicitor to help you with this part of the due diligence.
7. Assess staff arrangements
Find out how many staff are employed, what their roles are, and what their terms and conditions include. You may need to honour these under TUPE regulations.
8. Review systems and processes
Check whether the business has good systems for bookkeeping, payroll, compliance, and customer management. Poor systems may mean extra costs after purchase.
Final advice
Proper due diligence helps protect you from future problems and ensures you are paying a fair price.
Always work with your accountant and solicitor when buying a business.
Grenfell James Technology Adoption Index
How does your business perform against others adopting financial tech? Find out with our interactive diagnostic:
1.
How does your business receive invoices?
A)
Invoices are mainly received in paper form
B)
Invoices are mainly received by email
C)
Invoices are emailed then automatically forwarded to a designated mailbox
2.
How are purchase invoices processed?
A)
Invoices are entered manually
B)
Invoices are attached to manually raised invoices
C)
Automated software (e.g. ReceiptBank, 1Tap, HubDoc etc) collates invoices
3.
How are accounts processed?
A)
Using Excel/paper-based
B)
Using Computer-based, offline software
C)
Using cloud-based accountancy software
4.
How often is business data revised?
A)
Data is updated annually
B)
Data is updated quarterly
C)
Data is updated monthly or more often
5.
How is banking updated for your business?
A)
Banking is updated manually
B)
Banking is updated by imports
C)
Banking is updated via a live feed
6.
How are bank payments made?
A)
Bank payments are manual
B)
Bank payments are made using bulk imports
C)
Bank payments are made directly via accounting software
7.
How are bank receipts reconciled?
A)
Receipts are chased and reconciled manually
B)
Receipts are chased and reconciled automatically
C)
A third-party platform is used to chase debts and collect fees
8.
How often are management reports produced?
A)
No reports are provided
B)
Reports are provided but often too late to be valuable
C)
Reports are automated with real-time information
Score 8-12:
Curious Exploration
Your financial technology phase is Curious Exploration
% of respondent businesses are in this phase too.
Switching accountancy systems may seem like an upheaval, but can be much more straightforward than most businesses imagine. From talking to our clients, they have found moving from paper invoicing and desktop-based accounting software to the cloud and apps quickly makes the transition process a worthwhile investment of time. Digital accounting solutions bring in streamlined processes, up-to-date business data and greater confidence in the accuracy of information when making financial decisions.
Grenfell James works with your team to fully assess the needs of your business and minimise the impact of any transitions for solutions we recommend.
Score 13-19:
Measured Discovery
Your financial technology phase is Measured Discovery
% of respondent businesses are in this phase too.
Once cloud accountancy software is in place, there’s still plenty of scope to improve your accountancy processes and make sure your business is maximising the benefits of adopting a digital accounting solution. Grenfell James assesses each business to understand how any implemented solutions are being used, identify areas for improvement and the needs of the business overall to support your business goals and achieve success.
Our team of experts can discuss a range of time-saving automation and get different apps and cloud-based solutions talking to create and manage a digital accountancy eco-system to help your business grow.
Score 20-24:
Bold Innovation
Your financial technology phase is Bold Innovation
% of respondent businesses are in this phase too.
You know the benefits of accounting technology and the impact it can have on your business goals. If you want to take it a step further, our team can conduct a systematic review of your processes, apps and business goals to ensure your digital accountancy ecosystem is keeping pace with the changing needs of a growing business.