Funds flow statement
A funds flow statement is the schedule setting out every payment made on closing day — who sends what amount to whom, in what order, and from which account. It converts a purchase price into the actual wires that have to leave the right accounts at the right time.
A purchase price is almost never a single payment. It is the price adjusted for working capital, less the holdback retained, less amounts paid directly to discharge existing loans, plus or minus prorated rent, utilities and prepaid items — and each of those goes to a different recipient.
What it typically covers
- The lender advancing directly to the seller’s lawyer rather than to the buyer
- Payout of the seller’s existing loans, so security can be discharged at closing
- The holdback going to escrow rather than to the seller
- Prorations for rent, utilities, property tax and prepaid contracts
- Professional fees, transfer fees and registration costs
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentSelling a business
- 02Treadstone LawLegal commentaryHow Money Actually Moves on Closing Day in an Ontario Business Sale
- 03Treadstone LawLegal commentaryConditions Precedent to Closing in an Ontario Business Sale Agreement
- 04Treadstone LawLegal commentaryEscrow and Holdbacks in an Ontario Business Sale
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