What exactly is liquidity and cash flow and how does it relate to consumer contract financing? In a certain sense liquidity has to do with a business’s ability to convert non-cash assets to cash or to otherwise obtain cash to address specific obligations. The prudent entrepreneur is always about the business of appraising current amounts of liquid assets as they relate to future cash flows. Business owners who work directly with consumers, providing products and/or services may not be aware that the consumer notes which they hold, for example, in the form of a retail installment contract, may be in effect, a very liquid asset.
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