Are you a business owner tired of paying interest back to your bank on the money you borrow? Did you know you can use a strategy called Cash Flow Banking to self-finance business expenses and recapture your interest?
Cash flow is a term used in business but just as relevant when it comes to managing personal finances. However, in business, cash flow becomes a little more complex as it refers to the operational turnover of a business and its ability to generate revenues, manage daily operations, pay taxes, purchase inventory and supplies, and pay employees.
One of the biggest stressors business owners face is having enough cash flow to cover expenses and leverage new opportunities for business growth. To generate enough cash flow to keep a business running, business owners typically must rely on external funding sources such as bank loans, lines of credit or credit cards.
However, when you rely on the banks to generate cash flow to cover expenses in your business, you end up paying out a large amount of interest back to financial institutions. Cash flow is the lifeblood of any business, so paying out high-interest rates and expensive banking fees quickly turn into destructive expenses that can financially bleed your business dry.
What is Cash Flow Banking?
Cash Flow Banking is a financial strategy that gives you, as a business owner, greater financial control and the ability to self-finance business expenses by allowing you to capture the opportunity cost of your dollars using a dividend-paying (also called par life), corporate-owned whole life insurance policy as a secure and predictable savings vehicle to redirect and store excess business revenue.
How Does Cash Flow Banking Work?
Cash Flow Banking works by using the cash value of dividend-paying whole life insurance as the lending vehicle from which you can borrow money by taking out a policy loan, much like you would at a bank. However, traditional borrowing (bank loans or lines of credit) is rigged in the bank’s favour because the interest you pay back to the bank deepens their financial pockets, not yours. When you use dividend-paying whole life insurance policy as a lending vehicle, you’re able to “operate as your own bank and recapture the interest.
Here’s how it works. When you pay interest on a policy loan, you’re paying interest back to a mutual life insurance company. This interest (or money) gets deposited into a participating account, of which you are a participating shareholder. That money in the participating account is managed so effectively, using specific expertise and through low-risk and diverse investments, it can potentially yield a surplus. In turn, this surplus can be used to create dividends that are paid out annually to participating shareholders. This annual dividend payment can offset the interest you paid. Another way of looking at it is, you’re paying the interest back to yourself. That’s more money in your pocket as a business owner!
To learn more go to Cash Flow & Business Financing and watch the video below How to Create Cash Flow Today That Creates Cash Flow Forever.
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