Revenue verification is the core of financial due diligence — confirming that the revenue the seller reported is real, attributable to the business as an ongoing concern, and likely to continue under new ownership. Multiple independent verification methods provide the most reliable picture.
Bank Statement Reconciliation
Request 36 months of bank statements for all business accounts. Total the monthly deposits and compare to the P&L revenue for each month and year. Significant unexplained differences — either above or below reported revenue — require explanation. For cash-heavy businesses, deposits will typically be less than reported revenue (cash kept for operating expenses), but the trend should be consistent and explainable.
Third-Party Data Sources
Many businesses have third-party revenue documentation that provides independent verification. POS systems produce transaction reports that can be compared to reported revenue. Sales tax returns submitted to the Illinois Department of Revenue provide another independent revenue check — the taxable sales reported to IDOR should be reasonably consistent with taxable revenue reported on the P&L. Insurance revenue for medical, dental, and therapy practices can be cross-verified against ERA (Explanation of Remittance) reports from payers.
Customer reference calls are the most qualitative revenue verification method. Speaking with 3–5 of the business's key customers about their spending history, satisfaction, and plans to continue using the business after an ownership change provides revenue sustainability insight that no financial document can replicate.