Clean the AR before the buyer prices it for you

You've decided to sell the company—or you're buying one. Either way, there's a number on the balance sheet that's about to get a lot of attention: accounts receivable.

Buyers don't see AR as revenue. They see it as risk. And in diligence, old balances don't stay neutral—they become a haircut on the purchase price, a holdback in the escrow, or a credibility problem that makes the buyer question everything else on the books.

What the buyer's team actually looks at

The quality-of-earnings analysis works through your receivables like a buyer's counsel with a mandate to find every discount:

• The aging schedule—concentration of 90+ day balances is a discount, plain and simple
• The write-off history—a pattern of aged accounts dying tells the buyer your collections function doesn't work
• The concentration risk—one customer owing 40% of the AR is one customer away from a valuation problem
• The dispute inventory—every disputed invoice is a liability the buyer will price in
• The revenue-recognition gap—recognized revenue that never became cash is the first thing a Q-of-E flags, and buyers run it on purpose

Why sellers wait—and why that's expensive

Sellers wait because collections feel like a distraction from the deal. But the receivables don't pause during diligence—they age. An account that's 70 days past due at LOI is 110 days past due at close, and the buyer's model has already moved it into the "discount this" column. Every month of delay is a permanent discount on the purchase price.

There's also the quiet problem: collecting during a sale is delicate. You can't torch a customer relationship the buyer is paying for. That's why we built the Soft Audit Program—recovery that presents as a routine receivables audit, so the AR cleans up without the seller's customers knowing they were contacted.

What to do six months before the deal

• Pull the aging schedule and attack the 90+ day bucket first—it's the one that hurts the valuation most
• Resolve or document every dispute—a documented dispute is priced differently than a vague one
• Diversify the concentration—or at least have the relationship story ready
• Place the aged accounts early, quietly, and get them collected before the buyer's team starts asking questions

For M&A work, we run discreet engagements under our M&A receivables program—clean up the aging book before close without disturbing the customer base you're selling.

The short version

Every aging receivable is a discount the buyer will find. Clean the AR before diligence, place the old accounts early, and keep the collections invisible—because the buyer isn't paying for your aging schedule. They're paying for your customers, and the AR is how you prove they're worth it.