Terms of the Cash Flow Industry

"A" credit customers:
Consumers with impeccable credit.

Acceleration Clause:
Language in a lease that secures payments for the full term of the lease.

Accounts Payable:
The amount of money a company owes for goods and services it has
received; any outstanding debt that a company has.

Accounts Receivable:
A collection of a company's outstanding invoices (invoices which have
not yet been paid by the company's customers).

Accounts Receivable Aging Report:
A report that shows how long invoices have been outstanding from each

Advance Rate:
The percentage of the face amount of an income stream that a funding
source will advance to a client.

The gradual, systematic payment of a debt, such as a mortgage or other
loan, in installments of principal and interest for a definite time, so that
at the end of that time, the debt will have been paid in full.

Articles of Incorporation:
A document filed with a U.S. state by the founders of a corporation. After
approving the articles, the state issues a Certificate of Incorporation; the
two documents together become the Charter of Incorporation.

Anything having commercial or exchange value that is owned by a
business, institution or individual. A business' assets might include its
real estate, equipment inventory, intellectual assets such as copyrights
or trademarks, and accounts receivable.

The ability to assign (or sell) an income stream to another individual or

The person or business entity that is given, obtains, or buys the right to
an asset.

The transfer of the rights, title or interest of any debt instrument that is
properly owned by another party.

The person giving or selling an asset, and subsequently, forfeiting rights
to that asset.

"B" through "D" credit customers:
These consumers have less than perfect to bad credit  Also called
sub-prime credit customers.

Bad Debt:
Any debt that is delinquent and has been written off as uncollectible.

Balance sheet:
A financial statement that shows a business' current financial condition,
with assets on the left side and liabilities and net worth on the right side.

The balance of principal that is due and owing in its entirety at a
specified point in time, but in any event, less than the time required to
fully amortize the debt.

A state of insolvency of an individual or organization; the inability to pay

The person or party entitled to receive the benefits, or proceeds, of the
life insurance policy upon the death of the insured person.

Bill of Lading:
A shipping document which gives instructions to the company
transporting the goods.

Bill of Sale:
A document used to transfer the title of certain goods from seller to

Business-based income streams:
Cash flow instruments that are paid to a business by another business
or government.

Cash flow:
The flow of cash through a business or household. In business terms,
cash flow involves the flow of cash into a company in the form of
revenues, and out of the company in the form of expenses.

Cash flow instrument:
Future payment or series of payments; also known as a debt instrument
or income stream.

Cash flow transaction:
Occurs whenever a funding source pays cash to an individual or
business in exchange for an income stream.

Chattel mortgage:
A mortgage on personal property, given to secure a debt. Typically used
in the sale of a business; also called a security agreement.

Something of value (land, a home, a car, etc.) that is pledged as security
to ensure the payment of a debt. Collateral is promised to a lender until
a loan is repaid. If the borrower defaults, the lender has the right, by law,
to seize the collateral.

Collateral-based income streams:
Cash flow instruments that are secured by collateral.

Refers to the funding source's ability to collect future income stream
payments once they are purchased.

Consumer-based income streams:
Cash flows in which the party that owes payments is a consumer, a
private individual.

Contingency-based income streams:
Cash flows in which the recipient is not necessarily legally entitled to
receive payments, or in which the amount of the payment is uncertain or
contingent upon outside factors.

The process of converting a qualified prospect into an active client.

A legal entity, chartered by a U.S. state or the federal government, and
separate and distinct from the persons who own it. It is regarded by the
courts as an artificial person; it may own property, incur debts, sue or be

One who is owed payments on a debt by a debtor.

Debt instrument:
Future payment or series of payments, or a debt that one party owes to
another party; also known as income streams or cash flow instruments.

One who owes something and makes payments to a creditor.

The omission or failure to perform or fulfill a legal duty, obligation, or
promise (i.e. to pay a debt).

Due diligence:
Exhaustive research on a transaction, income stream, client, and/or
payor. Due diligence may involve credit checks, appraisals, UCC
searches, lien searches, or on-site visits with clients.

The value or interest an owner has in property over and above any
indebtedness owed on the property.

The system by which money documents, personal property, or real
property is held in trust for another party by a disinterested third party
until the terms and conditions of the escrow instructions are completed
or terminated.

Face value:
The current principal balance on an income stream.

A funding source that specializes in funding accounts receivable.

The purchase of a business' accounts receivable at a discount.

Fictitious name:
A legal statement filed when a person uses a name other than his or
her own to operate a business.

A legal proceeding in court to seize property given as security for a debt
that is in default.

Funding source:
An individual investor or an investment company that buys income

Government-based income streams:
Cash flows paid by a government entity, either directly or through an
insurance company.

Borrowing funds from a lender, investing those funds in a debt
instrument, and giving the lender a security interest in the debt
instrument as the collateral for the loan.

Income stream:
A future payment or series of payments, or a debt that one party owes to
another party; also known as a debt instrument or cash flow instrument.

Institutional lenders:
Savings and loan associations, local and regional banks, mortgage
companies, finance companies, and commercial lenders.

Insurance-based income streams:
Cash flows stemming from insurance companies and paid to
individuals or businesses.

Intangible personal property:
Something that has value but is not a tangible asset, for example, a
trademark, copyright, patent, or trade secret.

Investment-to-value ratio:
A measure of how secure a creditor's position is and how likely the
creditor is to recoup all of his or her money in the event of a foreclosure.

Joint venture:
A business entity established for a specific task, operation, or goal.

The ratio of debt to total assets.
Limited liability company:
A form of business structure designed to combine the best of corporate
and partnership attributes into one entity.

Loan-to-value ratio:
A measure of how heavily mortgaged a property is and how likely the
owner is to default on his or her debts.

Marginal credit customers:
Consumers who may have had some slow pay problems, but generally
pay their bills.

Market value:
The price at which a ready, willing, and informed person would buy
something; the price property would command in the current market.

The process of identifying and communicating with qualified prospects.

Master Broker:
Individual who has been certified and designated by the American Cash
Flow Association to work with Diversified Cash Flow Specialists.

A written instrument that creates a lien by pledging real property as
security for a debt.

Notice of Pre-lien:
A document notifying the owner of real property that materials or
services are being furnished to his real property, putting him on notice
that the one sending it will look to have a lien against the real property if
those materials or services are not paid for.

Owner financing:
A type of financing in which the seller of a tangible item accepts a
promissory note as a portion of the purchase price; also called seller

A common form of joint ownership of a business.

Person or business that has the right to receive a payment or series of
payments and is interested in selling that income stream for cash; also
called the seller or client.

The person, company, or government responsible for making payments
on an income stream.

Any part of a payment stream that is less than the full amount due.

Personal guaranty:
A contractual agreement between a funding source and a seller,
whereby the seller assumes personal responsibility and liability for the
obligations of the income stream.

A group or package of income streams of the same type.

Privately held:
Owed to a private individual or business rather than to a bank or other
financial institution.

Profit and loss statement:
A financial statement that shows a historical record of a business'
income and expenses.

Promissory note:
A written promise to pay a specified amount to a specified party over a
certain period of time.

Real property:
Real estate.

A legal proceeding in court to seize property (other than real estate)
given as security for a debt that is in default.

An amount a funding source holds in its account to cover potential
payment defaults. After a certain time period has passed, the funding
source rebates the reserve to the client less any fees or charges for
delinquency; also called a bad debt reserve.

The discharge of an obligation by paying a party what is due (i.e., the
satisfaction of an IRS lien or the satisfaction of a mortgage).

The length of time payments have been made on a note or other debt

Secondary market:
The marketplace where individuals and businesses can sell privately
held income streams to funding sources for cash.

The bundling and resale of debt instruments to investors; permitted only
for parties licensed and regulated by the SEC.

Security interest:
An interest in property, other than real estate, which is given as security
for a debt or other obligation. A security interest is created by execution
of a security agreement and one or more financing statements under
the Uniform Commercial Code.

The person or company that is holding a debt instrument and wants to
sell it.

The collection of payments of interest and principal, as well as trust fund
items such as fire insurance, taxes, etc., on a note by the borrower in
accordance with the terms of the note. Servicing by the lender also
consists of operational procedures covering accounting, bookkeeping,
insurance, tax records, loan payment follow-up, delinquent loan
follow-up and loan analysis.

Sole proprietorship:
A business owned and operated by an individual.

The act of a creditor acknowledging in writing that a debt due him or her
by a debtor shall be inferior to the debt due another creditor by the same

The payment stream and/or balloon payment of an income stream
subsequent to another party's right and interest in the income stream;
usually the back half of the payment stream when another party has
purchased the front half.

Tangible personal property:
Personal property other than real estate, such as cars, boats, or other

Time value of money:
Concept that addresses the way the value of money changes over a
period of time.

Title commitment:
A commitment on the part of the insurer, once a title search has been
conducted, to provide the proposed insured with a title insurance policy
upon closing.

Title insurance:
Title insurance can benefit either the payor or the payee. Should the
beneficiary suffer any damages due to clouded or false title to real
estate, title insurance recompenses the damaged party to the extent of
the damages.

Title policy:
An insurance policy that insures a party against loss due to a defective

Trial balance printout:
A spreadsheet that lists all loans in a portfolio and their payment
schedule; usually required for a portfolio transaction.

Uniform Commercial Code (UCC):
Standardized set of guidelines protected by law that set down how
business transactions must be conducted.

A lease or note that has had few, if any, payments made.

The nature of viatical settlements is the assignment (transfer of life
insurance benefits)and sale of a death benefit. In the beginning, viatical
settlements were used primarily as a financial option for AIDS patients
with a clearly terminal illness, who were unable to obtain the resources
they need at a critical time, Eventually, victims of other terminal illnesses
such as cancer and leukemia recognized the advantages of viating their
life insurance policies to pay for current expenses.
no obligation consultation.

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