Cash Flow Investing
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Cash flow investing may be one of the niche money making tools of which the average American is not aware. Whether it is backing invoicing and expense bills for businesses or purchasing sub performing or nonperforming real estate loans, income stream investing is a way some people are taking advantage of others' distress. In most cases, the transactions are legal, although some infomercial ads may promote less than salient ways to achieve wealth in cash flow investing. Since the business can take several different forms, a look at some various investment opportunities might be helpful. In each case, one person's pain is another one's profit. Christians don't rail against God in the hard times because of an intimate understanding they haveof Him. "But our God is in the heavens; he hath done whatsover he hath pleased." (Psalm 115:3)
On the real estate side of things, the cash flow investing agent is always on the lookout for sub performing and non performing mortgage loans helped by banks or other lenders. In the case of the sub performing loan, this is the person who has decided that the bank should feel a sense of privilege that he is actually paying his loan at all. The pit bull of the bank calls this person every month and pleads, urges, cajoles and threatens to foreclose and the guy always pays but it might be ten or twenty days late before the check finally arrives. Maybe the promise of a lollipop might be the answer, but this customer is a drain on the human resources of the bank. He's more high maintenance than a Ferrari! The income stream investing agent buys this account from the bank at a big loss for the lender and then the agent personally works with the home owner to clean up his act, or forecloses and makes a nice profit on the resale. The non-performing loan is a DOA, more lifeless than a doorknob and definitely a candidate for sale by the bank to an agent and is handled with a tougher attitude towards the home owner, including foreclosure.
Cash flow investing can go another direction, and that is in providing cash for people now who are holding structured settlements, an annuity or insurance payments. For a number of people, the slow monthly drip of an annuity payment, a court ordered award payment, or an insurance settlement simply is too little to help with current circumstances. So once again, the investing agent is happy to actually buy these agreements, for a much lower value than face and so the customer has a lump sum and the investor has an agreement that he will either keep or sell to some other entrepreneurial type. But besides these agreements that can be bought, consider that notes on airplanes, notes on mobile homes, lottery winnings and even sports contracts can be bought and resold at high profits. The number of investment opportunities is lengthy and this list is not exhaustive.
One of the most innovative types of cash flow investing happens to come when agents link up with businesses that are having trouble with income stream issues. When businesses have to wait on customers to pay the thirty day invoices and at the same time bills are coming in for supplies, etc. the income stream, or lack thereof, becomes a real problem for the business owner. In this instance an investor will offer to enter into an agreement with the business to pay up to eighty five percent of the value of each invoice every month for a length of time, usually two or three years. In exchange, the business will pay a commission based on the entire invoice amount to the investor when the payment arrives. This provides the company, if it is economically viable, to be able to pay its bills on time, buy needed supplies and maintain a healthy income stream for most contingencies. This particular income stream strategy is called factoring. Certain issues such as who pays for defaults and slow pays must be decided ahead of time, with the factor or investor charging a higher commission for more problem customers.
The other side of the factoring strategy for cash flow investing is known as purchase order finance agreements. In this scenario, the business has a large number of orders for the product, but invoices aren't nearly ready for posting, so there is no income, but expenses keep rolling in. The cash flow investing agent then sets up an agreement between the business and himself to pay for eighty percent of the value of each purchase order amount. When the invoice finally goes out and the payment is submitted, the agent takes the money owed plus commission on the full amount of the invoice payment. If it meets the needs of the company and is profitable, it becomes a winning business strategy for the company and the agent.
Some of the longest waits for paid invoices happen in the medical profession. Ninety day waits are often very common. Perhaps many patients think the doctor has deep pockets and doesn't really miss their payment. Nonetheless, cash flow investing agents work the same way with medical firms as they do with businesses in factoring and accounts receivable processing. Some income stream firms even act as collection agents for outstanding medical invoices with which they will be receiving a commission. Not only are medical practices using this service, but also nursing homes, hospitals, imaging centers, pharmacies and even ambulatory centers. As the economic times seem to be getting darker, the opportunities for people to make money in a cash flow investment business seem to grow brighter.
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