Cash Flow Investing
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.
Cash Flow LendingCash flow lending can be vitally important to the continued success of a business which does not earn enough to keep the bills paid. Every aspect in the world of commerce depends on the ability to exchange and trade assets of monetary value and the tools necessary for the handling of necessary equipment. The term 'flow' is aptly used to describe the process as money can be seen to pass through those who possess it like flowing water, as a force which is in constant motion, easy to possess but impossible to hold on to. Vital to every business is the amount of cash that is generated, and how much is received from outside sources. A rule of thumb that should be lived by for a business to succeed is to make certain that the inflows always exceed the outflows.
In other words, to be able to claim success is to be sure that a company does not spend more than they make. The same goes for individuals as well. The purpose of a job or career is to be able to generate enough of an income to live off of, or to live the lifestyle of choice. For a dream to become a reality, a person must be certain to do all that is necessary to ensure a positive cash flow, and to be certain to not spend more than is earned in a normal paycheck, otherwise the need might arise for alternative funding such as cash flow lending, while a company does what is necessary to get out of a tight spot and back onto to the path to success.
An important aspect that businesses should keep in mind is that the flow of cash and income are not the same and should be treated as two distinct factors that are of equal importance. An organization can be profitable with low cash flow and vice versa. Such a situation is far from the ideal; however, an occurrence where the two were out of balance would not be too much of a cause for alarm, yet the natural order does promote a healthy balance, as the Scripture says, "Who hath measured the waters in the hollow of his hand, and meted out heaven with the span, and comprehended the dust of the earth in a measure, and weighed the mountains in scales, and the hills in a balance" (Isaiah 40:12). A simple fact is that a company might have a positive transfer of money, one might not necessarily be making a profit. When such a situation arises, solutions can be hard to come by and cash flow lending might come into play. Experts say that more companies go out of business not due to an ability to produce profits, but due to insufficient transfer of money.
A company might be forced to sell off equipment or additional factories due to a decrease in the demand for a product or service. The company can receive positive cash flow once a sale of equipment or property has been made, yet overall the company loses money in the process, making the need for cash flow lending and apparent one. Financial experts suggest that business owners, investors and individuals must always be aware of the present state of finances by checking statements and accounts on a regular basis to be aware any time negative profits are made despite the positive movement of funds.
The best way of gaining an idea on how much a company is worth and if cash flow lending is necessary cannot be made solely on how much total monetary worth is made. A company cannot make positive strides if no actual profit is made. While the flow of cash can be an indicator of various factors, not everything can be adequately measured. However active a company might appear to be, the general profitability could be quite low. The fact that money moves through transactions by way of sales, earning and so on, but the only factors taken into account are the actual amounts of the cash alone. Most businesses have many more assets that are not all related to sales and marketing schemes. Once a business or organization has reached the point where the flow does not cover the amount needed to pay necessary bills on the processes that are vital to keeping it going, the time has come for the people in charge to look into cash flow lending.
The flow of funds can be an important with which to measure the overall health of a company. Before a business or organization plans for future investments or ventures, the possible flowing of funds must be checked. The financial state of a company could be worse than what appears on the surface. In addition to sales, funds must be replenished either by way of investment strategies, upkeep of equipment, and so on. Occasionally, in order for a company to stay afloat, cash flow lending services are looked to as a way of gaining extra funding to help a company get back to where it needs to be. The state monetary funds can change on a monthly basis, so attention must be paid to relevant accounts and the overall financial state of the organization.
The steps necessary for success in a competitive market is not only a working knowledge of the applicable field, but a substantial dose of know how when managing finances. A company can suffer from lack of assets even if on the surface, profits are made. The need for cash flow lending can be avoided of people make a habit of keeping records and accounts of finances so that the appropriate actions can be taken to ensure that a company will not only see increase in profits, but enough funds to manage the equipment, tools and facilities needed.