How Should You Prepare Your Cash Contribution Before Buying an Accounting Practice?
Updated: Oct 24
Prepare your cash contribution by confirming the amount, documenting its source and arranging verified transfers early enough for the funds to reach the required account.
For an Australian accounting practice buyer, a healthy balance is reassuring. Settlement readiness asks a more practical question: can the right amount leave the right account and arrive where it is needed by the agreed deadline?
That question deserves attention before the final week.
Money spread across accounts, awaiting an asset sale or promised by another person can introduce dependencies that a headline savings figure hides. Your solicitor and finance adviser need the current position, including anything that could change it.
Your cash contribution: the short answer
Reconcile the required payment with the latest settlement figures and confirmed finance position.
Identify the actual account, account holder and available amount for each contribution.
Disclose borrowed money, third-party support and funds dependent on another event.
Confirm transfer limits, processing requirements and the recipient’s deadline.
Keep transaction costs and post-settlement working capital separately visible.
Verify payment instructions independently, then obtain confirmation of receipt.
Start with the amount you actually need to pay
Ask your solicitor for a current breakdown of the money required from you, including how any deposit already paid is credited. business.gov.au’s guide to buying an existing business explains that the contract sets out the final cost and accepted payment method. Your payment plan should follow the transaction documents and current completion calculation.
Reconcile that calculation with the amount of acquisition finance currently expected to be available. Identify separately payable legal fees, transaction expenses and any adjustments still awaiting confirmation.
A preliminary calculation should carry a date and identify its assumptions, so an old figure does not quietly become the transfer instruction.
The discussion of what an accounting practice asking price tells you explains why the advertised figure needs context. At this stage, the useful task is translating agreed terms into the amounts and dates you must meet, with advisers confirming any unresolved legal or tax treatment.
Where is the money, and who controls it?
Prepare a contribution schedule showing each amount, its source, the account holder, current location and planned destination. Distinguish money available now from money expected later.
If the funds sit in a joint account, company or trust, confirm who can authorise the transfer and ask your advisers what documentation is needed.
An investment statement or property sale estimate may establish an asset’s value without establishing available settlement cash. Record the steps still needed to convert it, any costs affecting the net amount and the date the proceeds are expected to clear.
The receiving party’s deadline matters more than the date you intend to press ‘send’.
Show the contribution schedule to the people managing your transaction. The guide on when to start discussing accounting practice acquisition finance explains why early conversations give dependencies time to surface. Update the schedule if money moves or its expected availability changes.
Make borrowed and third-party funds visible
Tell your finance adviser if any contribution comes from another loan, a family member, an investor or a related entity. Explain whether the money is repayable, conditional or subject to someone else’s approval.
A transfer into your account does not, by itself, explain the underlying arrangement.
Ask what evidence the proposed lender requires and whether that source is acceptable for your application. Requirements depend on the transaction and lender, so there is no universal statement period or document list.
Your solicitor and accountant should advise on how relevant gifts, loans or entity transfers are documented.
Where an asset sale or third-party release remains outstanding, name the dependency and the person responsible for confirming it. Avoid describing a promise as cleared funds.
If availability slips, tell the team promptly so your solicitor can explain the contractual consequences and any proposed change to completion.
Build a transfer timetable with evidence
Confirm the account from which payment will be made and the method your solicitor or other authorised recipient requires. Check applicable transfer limits, approval steps, cut-off times and processing arrangements with the account provider.
Allow for weekends and public holidays where relevant, using advice specific to your payment rather than a generic number of days.
Ask the recipient when funds must be received and how receipt will be acknowledged. Then work backwards through any transfers between your own accounts. Keep a dated record of the amount instructed, destination, payment reference and receipt confirmation.
An instruction submitted and money received are different points in that sequence.
For lender evidence, ask your acquisition finance adviser to clarify the current requirements and secure submission channel. Statements identifying the account holder, balance and transactions, or documents explaining a recent inflow, may be requested.
You should provide what is required and ask before redacting information, because an incomplete record may leave the reviewer unable to reconcile the funds.
Protect the money needed after settlement
Keep the purchase contribution, transaction expenses and operating reserve as separate lines in your plan. business.gov.au’s cash flow statement guidance explains how forecasting incoming and outgoing payments helps identify shortages. Use that timing approach to assess what the practice will need after completion, clearly identifying estimates.
An accounting practice may have wages, rent and software payments before expected client receipts arrive. The distinction between revenue earned and cash collected makes debtors and work in progress particularly relevant. Confirm which receipts belong to the buyer and when they are realistically expected.
Also consider premises and lease due diligence when identifying immediate occupancy costs. A reserve already allocated to payroll cannot simultaneously fill a settlement shortfall. If the final contribution changes, revisit the remaining cash position with your advisers.
Verify instructions before the money moves
The Australian Signals Directorate’s guidance on business email compromise describes criminals impersonating business representatives or using compromised accounts, including emails requesting payment or changed account details. A familiar name in an email thread should not be the only basis for a substantial transfer.
Agree an independent verification process with your solicitor. Confirm the account details through an established contact number obtained separately from the payment email, and treat changed instructions as requiring fresh verification. Keep a record of who confirmed them.
If anything looks inconsistent, pause and contact the authorised recipient before proceeding.
The same care discussed in accounting practice data and cybersecurity due diligence applies to settlement communications. Secure handling of contribution evidence and payment instructions belongs in the preparation plan.
An illustrative cash-readiness example
Suppose the buyer’s confirmed payment requirement is $180,000, with $20,000 of transaction costs and a $50,000 operating reserve separately budgeted. These invented figures illustrate cash organisation, not a recommended contribution, reserve or finance structure.
The buyer has $140,000 available and expects $40,000 from an investment sale. The schedule identifies that pending receipt and its expected clearing date. The reserve remains untouched.
If the sale proceeds cannot arrive by the recipient’s deadline, the buyer alerts the advisers rather than assuming a same-day transfer will solve the gap. Actual arrangements and outcomes vary.
Frequently asked questions
Is a screenshot enough to prove my contribution?
Ask what evidence is required. A screenshot may lack account ownership, transaction history or other information needed to reconcile the funds. Do not assume it satisfies the lender’s request.
Can I use money borrowed from family?
Disclose the arrangement and repayment terms before relying on it. You should obtain legal and accounting advice about the arrangement itself, as its acceptability and documentation depend on the lender and transaction.
When should I transfer my contribution?
Follow the recipient’s confirmed deadline and verified instructions. Check the payment method’s limits and processing requirements early, then allow the time those arrangements require.
Can my operating reserve cover a higher settlement amount?
Recalculate the cash remaining before deciding. Money transferred at settlement will no longer be available for operating payments, so discuss any shortfall and revised forecast with your advisers.
What if the payment account details change?
Stop and verify the change independently through established contact details. Do not rely solely on a reply to the email or a telephone number supplied in the changed instructions.
Arrive with a contribution that can be explained
Before authorising payment, know the required amount, where it sits, what remains conditional and when it must arrive.
Give your advisers current evidence, protect the operating reserve and verify the destination. That preparation turns a proposed contribution into an actionable settlement plan.
Considering Buying an Accounting Practice?
Discuss your contribution evidence and transfer readiness alongside the current acquisition finance requirements.
General information only. This article does not constitute financial, credit, legal, tax, accounting, compliance or valuation advice. Finance is subject to lender approval, eligibility criteria, terms, fees and conditions. Consider obtaining independent professional advice for your circumstances before acting.
