Buying a salon and Prepaids

[txsanchez]

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?

[top250tansyou]

Accept prepaid packages and move on. The thing i would be careful with though is that you must be able to find the sale in computer.

[RCKnep3]

also depends on the software, I know tantracks has unearned income...IE packages paid for and still not 100% used. But also agree with the move on. I bought a salon recently and had the same question, but sucked it up as part of the purchase since I was able to get the purchase price were I wanted it. after a few months it's off the books and it's all your income

[txsanchez]

Thanks a bunch for the input...glad I asked

[tanman0302]

I would say to just accept prepays UNLESS you KNOW that the seller PURPOSELY sold packages cheap to put more money in their pocket before the sale!! Basically, if they purposely try to make extra money and take it away from you...get it back!!