What are the Different Types of Cash Flow Services?
Cash flow services help businesses and consumers to access cash or cash equivalents quickly. Businesses and consumers can access cash or cash equivalents from companies who have these assets readily available. The business or consumer looking for cash receives the needed, cash and the company purchasing the business or consumer’s asset receives such asset on a discounted basis. These cash flow services include accounts receivable funding, short-term bridge financing, cash payments for outstanding notes, funds provided for specific uses or privately held loans.
Accounts receivable funding allows companies that have an outstanding accounts receivable to sell those assets in order to receive payment for them quickly. This type of cash flow service works for medical professionals who are waiting on payment from insurance companies. The cash flow services company pays the medical professional a percentage of its outstanding receivable amount at the time the transaction is completed. The company is assigned the right to receive the funds from the insurance company in full at such time as the insurance company pays the funds.
Short-term bridge financing is generally provided as part of a construction process, a foreclosure or bankruptcy proceeding, but it also can be used to cover payroll payments or other ongoing expenses. These cash flow services are meant to cover short-term financial requirements, and as such, they tend to offer fast closings. A bridge loan is typically taken out for a period of time, usually two weeks to three years, until a more permanent form of financing can be secured. These types of loans are used either to avoid a problem or to take advantage of an opportunity.
Cash payment for an outstanding note is another form of cash flow services. This service is provided primarily to a consumer or small business in order to cash out long-term assets. The consumer or business sells its real estate notes, business settlement or other outstanding long-term receivable to the cash flow services company at a discount in order to receive funding quickly.
There are companies that provide specialized cash flow services for specific uses or as privately held loans. These uses might include loans for a month’s payroll, for expansion of a company’s facilities or as a boost to a start-up company to get things going. Depending on the type of loan needed, the business or consumer makes inquires of different companies. A start-up company usually goes to a venture capital firm to access its needed funding. Wealthy individuals might also provide funding in these instances.
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