Seller/Company Credit Cards and Working Capital Adjustment Questions

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by a searcher from University of California, Los Angeles - UCLA Anderson School of Management
in Wellington, FL, USA

2yrs ago

Seller/Company Credit Cards and Working Capital Adjustment Questions

Hi all,

I've seen several deals where sellers have credit cards on their balance sheets. Are these typically adjusted as part of the working capital calculation on a transaction? To me it seems like it would be a debt-like item but certainly arguments can be made against that.

Thanks

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reply by a lender 2yrs ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

From what I have seen is it is usually considered debt and required to be paid off by the seller at closing. I hope that answers your question.

reply by a searcher 2yrs ago
from Missouri University of Science and Technology in Perth WA, Australia

Debt without a doubt to be paid at close by seller.

I would scrutinise the historic use if you can see a pattern. If it’s being used to support a sales rep travelling, then it’s likely for ease of transacting and not necessarily a source of credit for the company.

Ensure it’s considered in the working capital figure in any case.