Proof 1 of 8

The Books

Why a buyer cares

Nothing else can be proven until the numbers can be trusted. A buyer prices only the cash flow their accountant can verify.

How this proof is scored

Each piece of evidence below gets a score. The score for The Books is the lowest of its four evidence items. A buyer looks for the weak spot, so the weak spot sets the score.

0. Not proven: You believe it, but cannot show it.
1. Partly: Evidence exists but is incomplete, late, or needs you to explain it.
2. Proven: A third party could verify it from documents alone.
3. Proven and tested: Verified and stress-tested: an outsider reviewed it, or it held up when it mattered.

The four pieces of evidence

Each piece starts with the question a buyer will ask. Then it shows what a good answer looks like, and what makes it hold up under pressure.

Evidence 1

Monthly close

A buyer asks this to find out whether the numbers and claims hold up without you in the room.

The buyer's question

When do you close your books each month?

What Proven looks like

A third party could verify it from documents alone.

Closed by the 10th for each of the last 12 months, with the close dates logged.

What Proven and tested adds

Verified and stress-tested: an outsider reviewed it, or it held up when it mattered.

An outside CPA has reviewed a monthly close and found no material adjustments.

Evidence 2

Bridge to the tax return

A buyer asks this to find out whether the numbers and claims hold up without you in the room.

The buyer's question

Do your books tie to your tax return?

What Proven looks like

A third party could verify it from documents alone.

A one-page bridge from P&L profit to tax return income for each of the last three years.

What Proven and tested adds

Verified and stress-tested: an outsider reviewed it, or it held up when it mattered.

The bridge was prepared or reviewed by a CPA with business-sale experience.

Evidence 3

Add-back schedule

A buyer asks this to find out whether the numbers and claims hold up without you in the room.

The buyer's question

Which expenses are you asking me to add back, and can you document each one?

What Proven looks like

A third party could verify it from documents alone.

A written add-back schedule with an invoice or ledger reference behind every line.

What Proven and tested adds

Verified and stress-tested: an outsider reviewed it, or it held up when it mattered.

The schedule has been through a practice quality of earnings review and held up.

Evidence 4

Balance sheet you can stand behind

A buyer asks this to find out whether the numbers and claims hold up without you in the room.

The buyer's question

Are AR, AP, WIP and debt on your balance sheet real?

What Proven looks like

A third party could verify it from documents alone.

AR and AP agings, the WIP schedule and the debt schedule tie to the balance sheet every month.

What Proven and tested adds

Verified and stress-tested: an outsider reviewed it, or it held up when it mattered.

Twelve consecutive months of tied schedules, with no unexplained year-end adjustments.

Readiness documents

These are the documents that back up this proof. Keep each one current. A document that is a year out of date tells a buyer the business only gets organised when someone asks.

Document	What it is and why	Refresh
Monthly financial statements, last 36 months	P&L, balance sheet and cash flow for each month. Shows the trend, not just year-end.	Monthly
Close calendar and log	The date each month was closed. Proves the discipline exists.	Monthly
Business tax returns, last 3 years	What a lender and the buyer's accountant will start from.	Annually
Bridge: P&L to tax return, last 3 years	Explains every difference between book profit and taxable income.	Annually
Add-back schedule with support	Each owner or one-time expense, with the document that proves it.	Quarterly
AR and AP aging reports	Who owes you, whom you owe, and how old each balance is.	Monthly
WIP schedule	Open jobs with cost to date, billed to date and estimated margin.	Monthly
Debt and lease schedule	Every loan, line and equipment lease with balance, payment and payoff terms.	Quarterly

Score The Books

Be honest. Score what you could show a buyer this week, not what you plan to fix.

Score this proof in the Scorecard

All eight proofs The Margin