Mark Osborne explains why accrual accounting matters more than cash accounting when you're selling a business. Accrual accounting exposes operational problems that cash accounting hides, and it changes how buyers assess risk and value what you've built.
Well, and there's so many things that happen from a sort of looking at it on paper perspective when you move from that cash basis to that accrual basis that really sort of highlights different choices that you would make in your business. Where when you're just looking at it on a cash basis, you might make certain choices and they look fine on paper. But when you're looking at it on that accrual basis, you can see how that shows sort of fragility, brittleness within the business operations, that you understand why that introduces risk for a particular buyer. And so having that sort of accrual basis accounting to look at as you're preparing for sale leads you to make so many different choices
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