Future payments are installment payments resulting from a court case that businesses and individuals receive. These payments are almost always secured by an annuity or government bond fund. Future payments are looked upon as income streams. Buying future payments is a type of investment, which is very lucrative. These investments allow investors to plan in advance, as they are already aware of payment options.

Companies that buy future payments are called funding or advanced funding companies. Funding companies function in a fairly uncomplicated manner. They simply buy future payments, i.e., provide a payment in exchange future payments. Structured settlement payments are profitable future payments for funding companies. This is because these are the most secured type of future payments and are almost always paid.

Funding companies also buy future payments in other forms. They may offer advanced funding to people who own private mortgage notes. At times, homes are bought through private mortgages. In such situations, private mortgage notes are made available to the seller, who functions like a mortgage company. At times advanced funding companies buy mortgage notes from the owner.

These companies also buy future payments from lottery winners. Particular lottery commissions guarantee these future payments. Many businesses are opting to sell invoices as future payments. This practice is becoming increasingly popular as these deals do not appear as debts in a balance sheet. Such transactions do not eat into business profits and the selling company does not have to secure assets to receive money.

The process of making money on future payments starts in the initial sages of buying. Funding companies charge a percentage of the balance due on these future payments while buying them. In simple terms future payments are always bought at a discounted rate as compared to their value. However, the amount charged for different transactions varies. This depends upon the type of future payment and the time it will take to receive the entire payment.