Factoring with eCapital - Thoughts and experiences?

Idk why brokers take long to pay, I have direct lines that pay me before delivering or right after they Over Night the check at my cost. But If you do factor, always ask for advance or see if the broker has quick paying service and save some $$$. When i started i had D&S but once i got on my feet i rarely use them. I believe D&S is a good Factoring company that don't like working with sketchy companies that helps small companies out.

 

Most brokers will stop dealing with factoring companies if you give them a call. The factoring company has no way of knowing. Tell the factoring company your done with them and in most cases there's a waiting period but like I said, give the broker a call and they will make the change without hearing from the factoring company.

 

Some factoring companies are very good and very honest. I worked with a company that even loaned a driver the money to get his truck fixed after an accident. They specialize in o/o with 1-6 trucks. They are small enough to offer personal attention.

 

You mean you work FOR that company. Obvious...

 

Don't feel bad, mega trucking has set things up just for that reason.

 

Freight brokers take a long time to pay because one of the goals is to keep the float as long as possible or make you NEED a "quick pay" from them or both.

To the astonishment of most truckers, a majority of shipper freight bills are usually pre paid or cod. That means they are paid before you even pull out of the lot, or they are paid at delivery. If a broker works with loads which are regularly $2,500 and he writes six of these a day, if he can manage to push his rollover-date back to 20 days, he collects interest on over $300,000; 365 days a year. Never mind the brokers who have managed to push their roll-over average to 60 days and beyond... I know a couple one man operations that have more than $1MM on the float... One of them keeps the float in muni bonds while making transactional funding loans at .5%.

Why does he want you to ask for quick-pay? Because 1)He's only going to give you a quick-pay on a load he's already been paid on. and 2)He's going to make more than a days pay by clicking a button that he should have pushed already anyway.

 

Pre-paid Shipper (or 3rd party sales) pays the freight.
Collect Receiver (or 3rd party buyer) pays the freight
COD Paid at delivery.

Where anyone gets the idea that pre-paid means the freight is already paid and collect means COD shows how little they know.

At one end I'm a shipper and my freight is pre-paid(paid by me)and I certainly don't pay the truck before it leaves. Freight into me is collect and I don't pay when they arrive. 95+% of the freight my trucks haul are direct(and pre-paid) and they don't pay me when loaded. Overall my average is 22 DTP.

Anyone in business will use any float available to them but the idea that a broker is paid upfront most of the time is naïve.

On the brokerage side I pay within 15 days and most times the day I receive the invoice. If some carrier wants a quick pay of course i'll discount it. Same as a discount for those that have to have fuel money.

 

Former Article 2 of the UCC did not define the terms "prepaid" or "collect." One place the terms "prepaid" and "collect" are defined is the National Motor Freight Classification (NMFC), published by the National Motor Freight Traffic Association, Inc. (NMFTA), a non-profit trade association.

Item 110 of the Classification contains the following definitions:

Section 5 (a) A "prepaid shipment" is one on which the charges for transportation service rendered at the request of the consignor, including charges for any accessorial services performed at the request of the consignor, are to be paid by the consignor.

Section 5 (b) A "collect shipment" is one on which the charges for transportation service, including accessorial services rendered at the request of the consignee, or requested by the consignor for the consignee, are to be paid for by the consignee.

Prepaid does not mean "paid in advance" nor does "collect" mean "C.O.D." Rather, these terms are designations in a truck bill of lading to indicate who has primary liability to the carrier for its charges, i.e., the consignor if "prepaid" or the consignee if "collect." Although the definitions of the NMFC legally control a shipment only when the motor carrier participates in the NMFC, in actual practice today the terms "prepaid" and "collect" are widely used for shipments not technically subject to the NMFC.

 

If you're going to copy the attorneys article word for word, you should give him some credit. By the way, call and ask him how DL Federal LLC taught the the advanced trucking finance course he attended back in 1999...

All I'm going to say on the matter is this... Like UPS, FedEx, or any other company that you don't have an ongoing business relationship with, terms are Net 0 from invoice receipt. Money is due as soon as you know how much it is. When you open the invoice, it is due. When you make an order for service, you sign (digitally) my shipping order, which is the same thing as a purchase order... Immediately my CRM issues the invoice to your companies' A/P dept. E-mail. Simultaneously, your A/R's phone will ring with a message telling you to pay me, all while the invoice is being printed with a balance of zero. As soon as payment is received, dispatch is notified and the load appears on their inventory.

Terms are only extended to companies you know. Companies you have an ongoing relationship with. 22 DTP? If that really is the true number, that company can't get credit at Fingerhut, let alone anyone I finance. A 78 Paydex is bad. I mean, it's not horribly bad, but its not as good as a 100. Which is where you should be. But hey, you already know that.

Oh yeah, and the article is wrong. While Prepaid freight has replaced FOB origin definition wise, its only because people like you are duplicating false information. Prepaid freight by definition is when I quote you an FOB destination rate that happens to be lofty, and you give me some push-back, so I discount the rate contingent on an FOB origin arrangement. You like the rate, but fear you won't always be in town as trucks are needed, so you ask me what type of rate and fsc we'd be looking at if you made a deposit in trust for the annual contract.

I quote the same rate but guarantee it from fuel volatility, could be saving $100Ks. You like, you sign. So I hook it up- I request the 5% of estimated fuel expenses be sent to the brokerage trust account to purchase Heating oil futures 20X margin to protect from diesel volatility. 8.333% of the estimated annual mileage bill is payable to us, today. 16.666% is sent to shared trust for monthly debit. Moving forward, invoices are sent on the 27th, net 7 from receipt. You then pay the invoices to the shared account in trust.

And from here on out, the BOL will not say "prepaid shipment". It WILL say "FREIGHT PREPAID".

Seriously? 22 days? lmao


EDIT: I Apologize. After re-reading I see where I had confused your shippers and your payment patterns. Just for a business credit tip though, PayDex starts running the day the invoice was printed, not received.

 

Most shippers prefer to ship prepaid then charge consignee full rate and actually get kickback from freight company.