How do I check that a cleaning service’s clients are not paying cash off the books?

Start from the work, not the bank statement. List every client with their service frequency, and estimate how much cleaning the crew could do in a week. Compare that with the revenue in the books. A large gap in either direction is a question for the seller. Speak with a few clients if the seller agrees, and ask how they usually pay. Their answers, compared with the invoices, help show whether the records tell the full story.

Then look at costs. Supplies, vehicle use, payroll and subcontractor payments should line up with the amount of work. If costs seem high for the stated sales, some income may be missing. If costs are low, work might be paid for in cash on both ends.

Check how clients pay. Invoices, e-transfers and deposits create a trail. Ask for a sample of invoices and trace them to deposits. Cash accounts need extra attention, so ask how they are recorded. Be careful about what you do with the answer. Unreported income is a serious matter and the books you buy on are the books lenders and buyers will rely on. Do not guess. Raise it with your accountant and lawyer, who can tell you how to proceed and how it affects the deal.

Key takeaways

• Compare clients, crew hours and costs with reported sales.
• Trace a sample of invoices to deposits.
• Take any gap to your accountant and lawyer instead of settling it yourself.