cash Flow
What is the
Cash Flow
Industry?
The
If you’ve ever read about “seller-
carryback mortgages,” or seen a
commercial for a company that buys Power
structured settlement and annuity
payments, or heard of businesses
selling accounts receivable, you are
aware of the cash flow industry.
of
Essentially, the cash flow industry
What a prospect initially
includes any business or individual
involved in the purchase of a piece
asks you for and what
PO
of paper that represents one person’s
you end up providing
promise to pay another person a can sometimes be quite
Funding
specific amount of money, usually
different. Still, the customer
over a specified time period. The
is pleased and you walk
piece of paper could be an invoice,
away with more business
a car loan, or anything in between.
Individuals or companies purchase
and more commissions.
that piece of paper, usually for less
than the face amount.
This “discount” is the result of a
concept known as the “time value”
of money. The assumption is that the
How many times have you heard the and earn your prospect’s business,
$200 you spend today will buy more
following objections as you work with try a different tactic. Start by telling
than it will 30 years from now — or
a potential client who needs financing? him about a program you offer called
even 30 days from now. So, the buyer
• “I don’t want to factor. I want a loan.” purchase-order funding. The chances
of payments should pay only as much
• “I need more money than my out- are most small or medium-sized
in today’s money as the payments
standing invoices represent.” businesses do not understand PO
will be worth when he or she actually
• “I’ve heard of factoring, but I don’t funding, or they’ve never heard the term.
receives them. It’s the same reason
want to do that.” With that simple turn of phrase, you’ve
lottery winners who take a lump-sum
• “I already have a factor, but I need now captured your prospect’s attention.
payment don’t receive the full face
more money to pay my suppliers.” Ultimately, you know the prospect
value of the lottery winnings.
• “I need a line of credit.”
needs factoring. But, like everyone
Fueled by cash flow consultants, the
• “I know all about factoring; I need
in business, the prospect thinks his
cash flow industry has developed during
something else.”
situation is different or special. In
the past two decades. The consultants
And bankers will even tell you
his mind, you’ve now offered him
find buyers for whatever form of paper
that they already have a factor for
a different, special avenue for
a person has to sell. A cash flow
their clients.
obtaining money.
transaction involves three parties: the
Time and again you know you
The discussion of PO financing
seller, the consultant, and the buyer.
have the simple, fast solution to
can eliminate the stigma attached to
The industry has recently expanded
your prospects’ problems. But your
factoring. Although factoring will
beyond paper that promises payment
prospects just aren’t listening.
be used at some point in most of
to forms of hoped-for payment — like
these types of transactions, the mental
lawsuits that haven’t been won yet or
It’s all in how you say it roadblock has been eliminated. The
credit card purchases that haven’t been
To get through this initial resistance advantage to the small-business owner
made yet. Obviously, these anticipated
payments are more risky, but buyers
are careful in determining which are
the chances are most small or medium-sized businesses
worth funding.
do not undersTand po funding, or they’ve never heard
To learn more about the cash flow
industry, read the articles in this section
the term. with that simple turn of phrase, you’ve now
and visit
americancashflow.com.
caPtuRed your prospect’s attention.
44 I July 08 I Growing Wealth I
growingwealthmag.com
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