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Purchasing: I am purchasing a gym and some of the clients have paid in full for a year. Is this money that I should be entitled to as the new business owner ?
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DC
David C Barnett, I help you buy, sell, plan, value a business answered:

Funny.. I made a video about this not long ago:
https://youtu.be/AXVpEh7ZHvc

The answer is.. It depends on what you negotiate.
The prepaid memberships should be on the balance sheet as 'deferred revenue.'
It's a debt to customers for undelivered service but it rarely appears because most gyms just record each transaction as a sale.

Cheers

Dave

For hundreds of articles and videos on buying, selling, financing and managing small and medium sized businesses, visit my blog at www.DavidCBarnett.com.
Be sure to never miss any new videos by signing up to my email list at www.DavidCBarnettList.com

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