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Things to note about Account Transactions


	Things to note about Account Transactions

Account Transaction

The following are among the procedures commonly used during account transactions. While this list is meant for reference only and should not be considered a complete guide, taking these steps will help with the transition of accounts and offer protection during the transition of a buy, sale or trade transaction. Additionally, a business broker can act as an impartial third party to ensure a smooth process. The broker can also provide assistance if either party encounters a difficulty during the transaction. The business broker provides a comprehensive service during the transaction and is therefore worth considering.

Account Payment History

Honesty is the best policy for any small business owner. So, be sure to check the account history to determine whether the accounts are paid on a timely basis. It’s important to be certain the person offering the accounts truly owns those accounts.

History of Accounts

Be sure to get a complete account history. It should show the dates of services performed, particularly in the event some warranty-related question arises. It should indicate when the account was billed and when payment was received. It should also contain a guide to the prices charged for additional services performed and the age of the accounts.

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Account Locations

The accounts should all be in locations that interest you, and they should be reasonably close to one another. Trade accounts with others to reduce travel time, tighten your route and service more accounts with greater efficiency.

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Be sure you’re comfortable with the account owner before entering a transaction!

It’s important to be comfortable with any transaction you conduct. So, before you get to business, meet the account holder and talk to them. If you’re new to the industry involved, you should ask for a training period. (Training periods of up to a month are common.) The comfort level you seek is the one that gauges the other party’s ability to conduct a fair, mutually beneficial transaction. So, if there’s any hesitancy on either side, it might be best to look for other accounts. Again, tradeyouraccounts.com is the best resource to find them.

Guarantee of accounts

The accounts should be guaranteed normally for a period of 3 months. During this time if a customer cancels service other than negligence of the new account holder these accounts should be replaced with accounts of the same value or the amount paid returned.

Covenant not to compete

This can be any where between 3-5 years. During this period the original account holder signs a covenant not to compete on the accounts.

Escrow

If buying or selling accounts an escrow account can be opened with a licensed escrow company. This account can hold certain funds during the transaction. This can protect both parties during the process.

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Retain a percentage of the purchase price

Retaining a percentage of the purchase price until all commitments on both sides have been completed. This can be held in escrow. A common percentage is 10% “Discuss these topics in the forums click here”

Purchase price of accounts

In many industries the purchase price of the accounts is a multiple of the monthly gross service income. The multiple can be any where up to 12 times the monthly gross income. Both parties negotiate and agree on the multiple used.

Notify customers of transition

This is agreed between both parties a common time frame is 2-4 weeks prior to the completion.

Sellers advise the buyer if new to the business

This would commonly be advice on where to file for licenses. If they intend to incorporate where they can submit papers. Advise on where to buy supplies. Liability insurances and associations to possible join.

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