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txsanchez · 05-14-2008, 07:14 PM

Question from a newbie buying a salon
I am about to close and am negotiating with the sellers about prepaids

My take...sellers sell pre-paid seasonal packages for short term....seller only supplies services for part of the period then sells the business to buyer
Buyer should be pro-rated those pre-paid packages to complete the customer contract terms....RIGHT? or am I off base?
We have already pro-rated the EFT drafts, but the issue in contention is the cash transactions where clients are buying a 3-6 month "special"
Several CPAs have told me that they should not be booking the revenue on the prepaids until they are actually providing the service in that month, not all of the revenue up front.
The Sellers contend that their "Salon" software doesn't track or report to that level and there is no way to get the data....I am figuring they just want to keep the existing cash in the business.

Any thoughts from the BTDT?

05-14-2008, 07:14 PM	#1 (permalink)
txsanchez Join Date: May 14 2008 Posts: 5 Rep Power: 0	Buying a salon and Prepaids Question from a newbie buying a salon I am about to close and am negotiating with the sellers about prepaids My take...sellers sell pre-paid seasonal packages for short term....seller only supplies services for part of the period then sells the business to buyer Buyer should be pro-rated those pre-paid packages to complete the customer contract terms....RIGHT? or am I off base? We have already pro-rated the EFT drafts, but the issue in contention is the cash transactions where clients are buying a 3-6 month "special" Several CPAs have told me that they should not be booking the revenue on the prepaids until they are actually providing the service in that month, not all of the revenue up front. The Sellers contend that their "Salon" software doesn't track or report to that level and there is no way to get the data....I am figuring they just want to keep the existing cash in the business. Any thoughts from the BTDT?