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Other Liquid Assets Which a Business Can Leverage to Help Keep it “Cash Rich” as Opposed to “Cash Poor”……………….by Debra Maples

 

Okay, so far we’ve been talking about the Asset-Based Lending industry and/or it’s cousin, the Cash Flow Industry and how they can help businesses with their working capital and cash flow issues.

 

We have reviewed some of the most commonly leveraged assets in these industries such as a business’ invoices, a merchant’s “future” credit/debit card receipts, equipment, and purchase orders and contracts.

 

We have also learned about some of the “financial tools” used to leverage these assets that include:

  1. Factoring of a business’ accounts receivable which converts that business’ invoices into immediate cash for daily operating expenses;

  2. Advances against a merchant’s “future” credit/debit card receipts;

  3. Equipment leasing which helps a business leverage it’s equipment while it is creating revenue; and

  4. Purchase order and contract funding for goods and services.

 

But what about “other” assets a business (or individual) might have which can be leveraged for its cash flow needs?

 

“Others?” you ask. Yes! There are many more! Remember…any piece of paper with a dollar value attached to it can be leveraged in these industries. And we will take a brief look at some of them now.

 

Perhaps your business has another liquid asset of which you are unaware which you can leverage and use to further enhance your cash flow! This list is always growing too. So, if you feel you have a negotiable paper instrument with a dollar value but are not sure, don’t hesitate to check it out!

 

Business-Based Cash Flow Income Streams:

  • Accounts Receivable

  • Aerospace leases

  • Bankruptcy Chapter 11 reorganization plans

  • Bankruptcy receivables

  • Commercial contracts

  • Commercial deficiency portfolios

  • Commercial leases

  • Construction receivables

  • Equipment leases

  • Equipment timeshares (or “fractional ownership interests”)

  • International receivables

  • Letters of credit

  • Medical receivables

  • Partnership agreements

  • Purchase orders

  • Sports contracts

  • Trade acceptance drafts

  • Warehouse inventory lines

For instance, a strip mall owner who has 20 retail merchant leases for the strip mall but does not need all the cash flow each month that is generated from these leases can sell a portion of the leases. The owner can then use the proceeds from this sale for improvements to the strip mall or for whatever other purposes he may wish, thus, self-financing the improvements!

 

Collateral-Based Cash Flow Income Streams

  • Aerospace notes

  • Automobile notes

  • Business notes

  • Collectibles notes

  • Equipment notes

  • Homeowner/condominium assessments

  • Marine notes

  • Mobile home notes

  • Private mortgage notes

  • RV, Motor home and business vehicle notes

  • Tax lien certificates and tax deeds

Private mortgage notes are the most easily recognizable of this group. This liquid asset (mortgage) has been leveraged when the name of the company to whom a mortgage payment is made changes from one company to another. Almost every long-term homeowner has experienced this at least once.

 

Consumer-Based Cash Flow Income Streams

  • Cemetery pre-need contracts

  • Certificates of deposit

  • Consumer contracts

  • Credit Card charge-offs

  • Delinquent debt

  • Health and country club memberships

  • Inheritances

  • Trust advances

  • License impounds

  • Retail installment agreements

  • Student loans

  • Timeshare and vacation club memberships

Consumer contracts such as with mini-storage facilities can also be leveraged (or a portion sold) if the storage facility owner does not need all of the cash flow from the contractual payments, similar to the strip mall owner in the above scenario.

 

The majority of the instruments listed under the first three categories (as noted in the above examples) are leveraged in portfolios rather than individually.

 

In the following categories, the instruments can be leveraged both individually and in portfolios.

 

Contingency-Based Cash Flow Income Streams

The Merchant Credit Card Receipt Advances would fall under the Sales Revenue category whereby the merchant is leveraging its monthly, documented credit and debit card sales.

 

Government-Based Cash Flow Income Streams

  • Farm contracts and conservation reserve payments

  • Lottery winnings

  • Tax refunds

  • Tax credits

We all know how Louisiana has been whooing the film industry with tax credit incentives, right? And most of these companies are not Louisiana companies either, right? So, what are they doing with “Louisiana” tax credits? They are SELLING them to Louisiana companies who can use them thereby leveraging a liquid asset!

 

Insurance-Based Cash Flow Income Streams

  • Annuities

  • Casino winnings

  • Corporate retirement plans

  • Funeral purchase assignments

  • Prizes and awards

  • Structured settlements and class action awards

  • Life Insurance cashouts (sometimes called viaticals)

There are funders who will purchase a person’s whole life insurance policy at a higher rate than what that individual would get from the insurer should he or she decided to cancel and cashout the policy.

 

If you have any questions at all or one of these liquid assets you would like to leverage or discuss in more detail, please do not hesitate to give me a call for a free, no-obligation consultation.

 

 

 

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