Proof of Cash
Also known as: Cash Proof, Bank Reconciliation Analysis
A proof of cash reconciles a company’s recorded revenue and expenses to the actual cash that moved through its bank accounts, confirming the reported numbers are real.
A proof of cash is a due diligence procedure that ties a company’s books to its bank statements. Rather than trusting the accounting records on their own, it reconciles recorded revenue and expenses to the cash that actually entered and left the bank over a period.
What it catches
- Revenue recorded but never collected.
- Expenses paid in cash but missing from the books.
- Timing games near period end that flatter results.
- Outright misstatement or fraud.
For an independent searcher or a lower middle market private equity buyer acquiring a company with informal bookkeeping, a proof of cash is often the single most reassuring procedure in the entire diligence process. It answers a basic question in plain terms: did the money really show up?