Cash Flow Notes For Sale - A Deeper Insight

With Factoring, account receivables owed to the business are used to secure the note. Receivables are sold to a funding source, known as the 'Factor'. The Factor can be a private investor, group of investors, bank or other lending institution.   Purchase order funding uses the same principals as Factoring. The only difference is upcoming purchase orders are used as collateral.

Seller carry back financing is quickly moving to the forefront of cash flow notes for sale. Seller carry back(s) can be used to fund real estate or business transactions. With the current credit crunch, more investors, business owners and property owners are turning to owner financing. Seller carry back goes by many names including "owner will carry" and "owner financing". In essence the owner carries all or part of the financing to close the deal. Some owners finance 20-percent of the purchase price, while others will finance 100-percent of the deal. Seller carry back notes can be sold to investors.

For instance, Sam Smith owns a business valued at $1 million. He sells the business to Joe Jones and carries back 50-percent of the note, or $500,000. Sam Smith can then sell the note to a private investor and assign payment rights over for the entire note, or part of it. Chances are Sam won't receive 100-percent of the note value. However, he will have access to a lump sum of cash instead of waiting years for repayment. Real estate investors might offer Sam $750,000 toward his $1 million worth of cash flow notes for sale. The investors now carry the risk and must collect the payments. They also must wait for repayment of the note unless they sell it to another investor; which is unlikely. In the end, the investors will earn a profit of $250,000, plus any new property value. 

Many investors appreciate the value of structured settlement cash flow notes. Structured settlements are used to compensate individuals who have been injured due to negligence, as well as lottery jackpot winners. Structured settlements are paid out through annuity payments backed by life insurance companies. Annuitants (individuals who receive payments) can sell all or part of their structured settlement to an investor. In order to sell annuity payments, Annuitants must receive authorization from the court.

A true need to sell the structured settlement must be proven to the judge. Structured settlements are generally arranged to provide individuals with consistent cash flow notes to pay for medical expenses and healthcare. Judges usually will not approve the sale of structured settlements if they feel it will cause financial harm to the Annuitant. Buying and selling cash flow notes can be beneficial for both parties. However, it is imperative to work with credible professionals and obtain proper legal documentation. Doing so will help to ensure profitable investment opportunities.