Deal With Credit Issues

Income and corporation taxes are levied on income or profit. In the disposal of a business, proceeds from the sale of trading assets such as stock are included in the trading income of the business for the year in which they are sold and corporation tax might be payable on any profit resulting from the sale.

Income tax could apply to a business vendor in many other areas too numerous to mention in a book such as this. You should, as a part of your exit planning, review with your advisors the likely impact the sale of your business will have on your personal income tax, particularly with regard to the proposed timing of the sale. Early advice will give you the time to plan for the optimum outcomes. Also, it is difficult, and often illegal, to backtrack on transactions after they have been processed, so it is necessary to get it right the first time.

Are the most effective and relevant performance measures in place to monitor and assess the effectiveness of financial
decisions?

Have you analysed key business ratios recently?

Is there a positive attitude in your organisation to budgets and budgeting?

Is decision-making focused on the most profitable products and services, or is it preoccupied with peripheral issues?

What are the least profitable parts of the organisation, and how will these be improved?

Are market and customer decisions focused on improving profitability? Too often the emphasis is put on such objectives as increasing market share or sales, which may involve a reduction in margins and greater financial exposure.

How efficiently is cash managed in your organisation? Do your strategic business decisions take account of cash considerations, such as the time value of money? Are you giving more credit than you are receiving?