Definition of Cash Flow Note

The person receiving payments on a note gets cash flow every month.

Cash flow notes are simply promissory notes that are written between two people, one of whom pays a fixed amount to the other on a regularly agreed-upon schedule for an item. It's called a cash flow note because the person receiving payments every month is getting a cash flow from the note payer.

Identification

Cash flow notes contain the individuals' names, contact information, the set monthly amount to be paid and the length of the payment period.

Types

Most cash flow notes are secured to real estate as the result of a private sale, rather than a sale using a real estate agent. Cash flow notes can involve airplanes, automobiles, boats or settlement payouts such as lottery winnings.

Clauses

Some cash flow notes contain clauses that determine problem or disagreement resolution or what penalties the payer could incur if payments are late.

Sales

Cash flow notes can be created, sold and purchased by individuals. The sales process can be as simple as reassigning ownership of the paperwork to involving escrow, as with the sale of real estate.

Considerations

A qualified attorney should review a copy of the cash flow note if you have any question about it before entering into this type of agreement.

References

• "Winning in the Cash Flow Business;" Russ Dalbey; 2003