Are you thinking of selling your business? If so, you need to make sure it’s as sellable as possible. One of the most important factors in determining a company’s sellability is its financial performance. But what many business owners don’t realize is that the quality of their financial reporting is just as important.
In this article, we’ll discuss the unseen component of sellability and how you can enhance your financial performance score with a routine audit.
The Unseen Component of Sellability
When most people think about what makes a company sellable, they think about things like gross revenue, net profit, and cash flow. But these are just the surface-level indicators of financial health. What really matters to buyers is the quality of the underlying financial reporting.
Buyers want to be able to trust that the numbers they’re seeing are accurate and reliable. They want to know that the company is being run in a sound financial manner. And they want to be able to use the financial statements to make informed decisions about the future of the business.
That’s why the quality of your financial reporting is so important. If your financial statements are inaccurate or unreliable, it will be difficult to attract potential buyers. And even if you do find a buyer, you’re likely to get a lower price for your business.
Enhance Your Financial Performance Score with a Routine Audit
One of the best ways to improve the quality of your financial reporting is to get a routine audit. An audit is an independent examination of your financial statements by a qualified auditor. The auditor will review your financial records and procedures to ensure that they are accurate and compliant with generally accepted accounting principles (GAAP).
An audit can help you to identify and correct any errors or omissions in your financial statements. It can also help you to improve your financial reporting processes and procedures. As a result, your financial statements will be more accurate, reliable, and defensible.
Strategies to Bolster Your Financial Performance Score
In addition to getting a routine audit, there are other things you can do to boost your financial performance score. Here are a few tips:
Keep accurate records.* This may seem like a no-brainer, but it’s important to keep accurate records of all of your financial transactions. This will make it easier for your auditor to review your financial statements and ensure that they are accurate.
Implement sound financial procedures.* Have a system in place for tracking your income and expenses, and for making sure that all of your financial transactions are properly documented. This will help to prevent errors and omissions in your financial statements.
Get regular financial advice.* Consider working with a financial advisor to help you manage your finances and make sure that your business is on track financially. An advisor can also help you to identify and correct any potential problems before they become serious.
Real-life Success Stories of Auditing
There are many examples of businesses that have benefited from routine audits. For example, one company saw a 20% increase in their sellability score after they invested in a routine audit. Another company was able to secure a higher bid for their business after they emphasized superior reporting.
The Impact of Routine Audits on Your Business
Investing in routine audits and concentrating on superior reporting can substantially elevate the sellability of your company. Not only will you attract more potential buyers, but you’ll also be in a position to demand a higher selling price.
So if you’re thinking of selling your business, make sure you take the time to improve the quality of your financial reporting. It could be the difference between getting a good price for your business and getting a great price.
Remember, it’s not just about the figures, it’s about the quality of those figures.
Here’s to successful auditing!