Factoring % | What's normal for a starting out company?

Quick pay is usually a better option ... Use it when you need it, don't use it when you don't ... no contracts that way ...


Factoring/quick pay costs more than you think ... I'd love to be able to make 3.99% on my money ... in 30 days ...

 

Shop around, there are tons of factoring companies now.

 

I would advise anyone using an factoring company to learn what type they are. Not all of them just buy the load from you but you may end up being responsible for their inability of collecting the debt, plus fees.

 

There is a great range of rates depending on several different factors. Companies who call themselves "non-recourse" will typically charge as much as 5%, even though their are ways in their contracts to recoup their money should the debtor refuse to pay. Some companies do daily rates which look great in the 0-30 day range, but can get quite expensive if you have some slow paying customers. We typically do a periodic fee where you pay X% for the first X days (typically 35-40-45) and it increases X% every 15 days thereafter to keep the annual rate steady. You can also get better rates based on the volume of receivables you have. Factors will typically give an outfit with 20 trucks a better rate that the solo owner operator.

So to answer your question, I think you could definitely find better rates. As someone else mentioned, shop around.

 

I factor about 50% of my loads. I pay average 3.14%. Luckily after 5 years I am looking at the end of the tunnel when I won't have to factor any more. The cost is expensive if you figure that percentage at an annual rate. If you have that cost figured in your overhead, its manageable.
Look for the loads the brokers will give you quick pay at no charge. Some charge as little as 2%. Some pay within 15 days. Look for those loads. Good luck.

 

This is why you have start up money. Factoring is just tossing hard earned cash to the wind.

 

Quick question, if someone had a factoring company set up, are they (the owner op) required to submit all of his invoices or only those he chooses to factor? In other words say the owner only wants to factor 1 load a week out of 4 loads a week or something, and chooses to wait for the money on the 3 other loads.

 

Depends on the factor & contract.

 

Double Yellow is right. Some contracts require you to factor any and all loads, Alternatively, other contracts allow you to choose which debtors to factor. For example, if you factor a TQL load, you would need to factor all TQL loads. You would still be able to wait for the money on other debtors though.