How can I verify a bar’s sales before buying it?

A bar takes in a lot of cash and card payments in small amounts, which makes the reported sales harder to confirm than in many businesses. The way to test them is to line up records that come from different places and see whether they tell the same story. Your accountant can design the tests. Start with the tests below.

Till reports against bank deposits

Ask for the point-of-sale reports by day and the bank statements for the same dates. Card sales should reach the bank through the payment processor, whose own statements you can request. Cash is harder. Check whether cash deposits match the till totals, and ask whether the seller pays any suppliers or staff from the till before banking.

Purchases against sales

A bar can only sell what it bought. Take the invoices from the beer, wine and spirits suppliers, work out roughly what those purchases should produce in sales, and compare the result with the sales reported. If sales look high for the stock bought, or low, ask why. Ask the seller to show the stock counts.

Cash handling and comps

Ask who can open the till, void a sale or give away a drink, and whether the system keeps a record of each. Large numbers of voids or free drinks are a question for the seller. Staff discounts and regular guests’ drinks may also reduce takings. A sound system shows these items clearly rather than hiding them.

Watch it trade

Ask the seller whether you can spend time in the bar on busy and quiet nights, or work alongside the staff for a trial period before closing. What you see in person can then be set beside the reports. Agree in writing what you may see, and ask your lawyer to include a confidentiality agreement.