When you find a buyer for your business, you’ll want to agree on how you are going to get paid.
Payment terms will be part of the Purchase Agreement that you and your buyer sign. You will need to agree upon the payment terms prior to the close of the sale of your business. Here are some things to consider as you prepare for this final phase of your business sale.
What payment terms do you want? What method of payment do you want?
On the close date, you will receive either the full sales price amount (less adjustments*) OR a portion of the sales price with a signed note from your buyer.
In terms of HOW you actually get your money, the most common method of payment will be a wire transfer. There could be a cashier’s check, but most banks would recommend a wire over a cashier’s check. If you use an escrow company for your sale, the escrow company will be in charge of handling the flow of money.
The main thing you need to know as you are selling your business is that payment terms are not a given and you’ll need to be specific about how you want to get paid.
As always, if you’re considering selling your business, talk to us.
*There are always adjustments to be made on closing day. These adjustments are exchanges of cash for things that have been paid for by the seller or buyer. Examples would include things like prorated rent or utilities, the value of unused membership cards, or closing day expenses that the buyer and seller have agreed to share.
