Filing a claim against a surety bond

Factoring is a tool and also offers a means to allow an individual or a company to keep a steady cash flow and not tie up personal credit and/or lines of credit which would be available for personal use. Expecting anyone to take on your debt without you having any "skin in the game" is unrealistic. As a business owner, you should be doing due diligence to ensure that the brokers and/or customers you choose to work with can pay for the services you provide. You could choose to subscribe to one of many credit agencies out there at about $700/year on average to get an idea of credit ratings and payment histories. Or the various load boards also offer an additional feature (for a cost) to also help in determining if a load is worth taking. Of course, D&B is also available (for a fee). Some brokers offer a quick pay option for a fee, sometimes as high as 5%. Some also offer cash advances (for a fee). Factoring companies are also very aggressive in collections and reporting payment histories to credit bureaus. How much time, effort and money are you willing to invest? A lawyer could cost you a nice coin if you have to exercise some muscle. Do you know how to file on a broker bond if need be? A factoring company provides these services to you. They have their own payment history data and also utilize D&B and other credit reporting agencies to determine risk factors.

To think that factoring companies provide absolutely no value to your business is very short-sighted IMHO. We use one and my average (with only 1 uncollected invoice recoursed) is less than 3%. My cost per mile includes my factoring costs, and quotes to slower paying brokers/customers also includes an appropriate premium for the additional monies it costs me above my business plan. And I have the added assurance that I have cash in the bank, money for fuel, can pay my bills and feed my family and still make a nice profit. If you take cash advances or use quick pay, what benefits do you get with this "added" service? If you are using credit cards and carrying the balances each month, are you getting anything for the interest you pay?

The goal is to do what you do best and let others do what they do best. As long as you know what you are getting into, how it benefits your business, and have accounted for the cost in your rate structure, how can that be a bad thing?