The A‑Z of Practical Matters to consider for settlement

By David Burrough

The weeks and days leading up to settlement can be extremely busy for a purchaser.  There will be removalists to arrange, packing to be done and a hundred other things to attend to.  We have put together a list of some of the key things that a purchaser should ensure are checked off their list prior to settlement.

Advance bookings

An adjustment will need to be made for any advance bookings on the date of settlement.  This is usually attended to on‑site between the parties.  It is necessary to determine what monies the Vendor has received in advance for future bookings.  This amount needs to be paid to the Purchaser by the Vendor.

Bank accounts and merchant facilities

Prior to the settlement day you should ensure that a general account for the business has been opened (usually your financier will attend to this) and that all merchant facilities have been arranged and are able to be installed as near to the settlement date as possible.  In most cases the merchant facilities will not have been installed prior to settlement and you will need to ensure that you are familiar in operating manual facilities.

Booking system

Familiarise yourself with the booking system and plan for any changes you may want to make to it.

Brochures

Check that there are plenty of brochures on hand and if necessary order new ones.

Business cards

You should ensure that you order your business cards ready for use after settlement

Cleaners, maintenance and linen

Ask the Vendor to provide a list of tradespeople and suppliers of goods needed in the business from time to time.

Electricity

You should ensure that the electricity company is contacted and the account transferred into your name.

Insurance

You will need to ensure that all of the appropriate insurances are in place prior to settlement.  Generally this will be a requirement of both the landlord and your financier.  You should ensure that any interested party is noted on the insurance policy.  The Purchaser will generally need to ensure that they have arranged for contents insurance, public risk, workcover, business interruption and any other insurance required by the lease.

Keys

Familiarise yourself with the key system and make sure that there are sufficient numbers of keys and that they are properly marked.

Plant and equipment (inventory)

On the morning of settlement you should check the inventory from the Contract and determine, that it is all accounted for and that it is in good working order and condition.

Stock

Under the terms of the contract, usually the Purchaser must pay the Vendor an additional amount for the stock.  A stocktake should be conducted on the evening prior to or the morning of settlement.  In most cases, the contract will contain a stock limit.  If the value of the stock is greater than this limit then you are entitled to reject items of the stock to reduce the value to the stock limit.  Once the stocktake has been completed and the value ascertained, the Purchaser needs to pay the Vendor this amount.  This is usually done on‑site by way of personal cheque.  In most cases the Purchaser will deduct from the stock amount, the amount that the Vendor owes the Purchaser for the advance bookings.

Telephone

You should contact the telephone company to ensure that the telephone account is transferred into your name.

Wholesale bookings

Obtain details from the Vendor of all wholesale programmes in which the business is involved.