"A"
credit customers:
Consumers with impeccable credit, who can obtain a
loan from traditional lenders.
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 showing how long invoices from each customer
have been outstanding.
Advance Rate:
The percentage of the face amount of an income stream
that a funding source will advance to a client.
Amortization:
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.
Asset:
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.
Assignability:
The ability to assign (or sell) an income stream to
another individual or business.
Assignee:
The person or business entity who is given, obtains,
or buys the right to an asset.
Assignment:
The transfer of the rights, title or interest of any
debt instrument that is properly owned by another
party.
Assignor:
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
and usually cannot qualify for traditional financing.
Also called sub-prime credit customers.
Bad Debt:
Any debt that is delinquent and has been written off
as uncollectable.
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.
Balloon:
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.
Bankruptcy:
A state of insolvency of an individual or
organization. The inability to pay debts.
Beneficiary:
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 buyer.
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 broker:
Professional whose primary purpose is to unite income
stream sellers with funding sources. They may operate
as referral sources or as the primary liaison for cash
flow transactions.
Cash flow industry:
The buying, selling, and brokering of privately held
debt in the secondary marketplace; the marketplace
where businesses and individuals get help managing
their cash flow needs.
Cash flow instrument:
Future payment or series of payments. Also called a
debt instrument or income stream.
Cash flow specialist:
A cash flow professional who brokers cash flow
transactions or buys cash flow instruments.
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.
Collateral:
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.
Collectibility:
Refers to the funding source's ability to collect
future income stream payments once they are purchased.
Commission:
Fee paid to a broker for executing or referring a cash
flow transaction.
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.
Conversion:
The process of converting a qualified prospect into an
active client.
Corporation:
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 sued.
Creditor:
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.
Debtor:
One who owes something and makes payments to a
creditor.
Default:
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.
Equity:
The value or interest an owner has in property over
and above any indebtedness owed on the property.
Escrow:
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.
Factor:
A funding source that specializes in funding accounts
receivable.
Factoring:
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.
Foreclosure:
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 streams.
Government-based income streams:
Cash flows paid by a government entity, either
directly or through an insurance company.
Hypothecation:
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.
Lead:
A piece of information of possible use in the search
for a prospective client.
Leverage:
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.
Marketing:
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.
Mortgage:
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 financing.
Partnership:
A common form of joint ownership of a business.
Payee:
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.)
Payor:
The person, company, or government responsible for
making payments on an income stream.
Partial:
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.
Portfolio:
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.
Replevin:
A legal proceeding in court to seize property (other
than real estate) given as security for a debt that is
in default.
Reserve:
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.
Satisfaction:
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).
Seasoning:
The length of time payments have been made on a note
or other debt instrument.
Secondary market:
The marketplace where individuals and businesses can
sell privately held income streams to funding sources
for cash.
Securitization:
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.
Seller:
The person or company that is holding a debt
instrument and wants to sell it.
Servicing:
The collection of payments of interest and principal,
and 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.
Subordination:
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 debtor.
Tail:
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 assets.
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 title.
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.
Unseasoned:
A lease or note that has had few, if any, payments
made.
Viatical:
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 lukemia recognized the advantages
of viating their life insurance policies to pay for
current expenses.
FREE,
No Obligation Consultation!
Contact
us by phone at 404-892-6712
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