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

Been considering it but going to try to make it through without factoring. With 2 company trucks, not a problem, but 4 o/o getting 80% long before I get paid in many cases, that makes for cash flow issues, though it should be short term. Fleetone offered 2.5pct flat but don't like their contract.

 

If you must borrow money consider a line of credit from a bank. You might pay 6% a year vs paying 2.5% for one month which is like 30% over a year.

 

With the way brokers go broke one or two loads can eat the imaginary savings over factoring. If you get a Non recourse agreement once your invoices are purchased your liability is over. 100K will cost you about 4-5K a year fee and one or two loads could eat that much. I used to not factor but I just add 4% back to the load cost when bidding the load. One fact to think about is 10K in receivables is worth zero if you don't get paid. And I've noticed brokers paying slower in the past year than before.

 

Don't use a factoring company. Try a line of credit through a local bank or credit union. Use 30 day pay, and use the money from the line of credit to survive until payday. Trust me, this is a way better option. If you decide to use CH Robinson or another 3PL, 2%-3% is the standard rate for "Quick Pay" options. Seriously though, don't use factoring - not only will you regret it as you flush those $$$ down the drain, but you can also end up out of business quick when things don't go their way, and they start to take money from new invoices via the UCC filing they will have on your business. Not worth it, not worth it at all.

 

This really depends on the factoring company. Even with the legal agreement, they can screw you when the customer doesn't pay. You are still liable no matter what. They have more $$$ than you and can easily win a legal argument in court. Not worth the time or money involved. If people stop using these factoring companies and run their businesses with a 30-day clock we can take these guys out of business. It's better to look at income at larger averages month over month instead of week by week anyway. If you want to become a "real" business, don't bother with the factoring scam game and run your business with integrity. Just my .02

 

Since factoring usually in 24 hours you'd notice if money was taken from your invoices quickly.
What you won't notice is if you have a line of credit to carry you as your spending money liek it's in the bank and then you find customer out of business. That's when you hear the big whoosh of your money down the drain.
You owe a line of credit plus you're not getting paid so your double in debt. A one or two truck operator can go under quickly with a loss of just few invoices. Non Recourse factoring = zero liability. CHR has quick paid factored in with what they pay.That's why companies like them and landstar pay lower rates. If factoring is a bad deal why do brokers do it as well it keeps your capital liquid and fluid for your use.

 

You must work for a factoring company. Hehe. Sorry, I don't drink the Kool-Aid. If you need money, do some calculations, save $ elsewhere first, then jump into trucking. (However, I wouldn't recommend it now with rates as low as they are right now). If you establish and continue to build on business relationships, you wouldn't need to worry about a customer not paying you. It sounds like you play the broker to broker game. That game only lands you out of business within a few years. You can survive, but it's painful and pointless. Factoring is a waste of your hard earned $$$. If you can't survive for 30 days, you don't belong in the trucking business. Sorry, but that's the truth.

 

Nine years going on ten I done heard all this before. With you mentioning CHR you mustn't been around that long. Building relationships that's a laugh the only thing a shipper is looking for is cheap price. I have direct customers and they want a discount cause they know what brokers percentage is and they think they should save it.
Makes no matter where you get your loads the rates suck. Good example network fob closed last week supposedly owing 5 million and no one knew till after it was closed. If you add your rate to the top of the load then it cost you nothing. Your argument here is as defect as your S corp one is with present economic conditions and rates lower than I've seen in years a single truck carrier is better served keeping their money closer than thirty days out. and filing sole proprietor.

 

You are so incorrect. Spot market rates may be a record low, but shipper rates are not exactly low. I have customers in which are paying $4-5/mile for runs around 600-900 miles total including deadhead. I have brokerage and carrier authority. In this industry you should have both in order to run a successful business. The brokerage authority also comes in handy when you don't have enough trucks in your fleet to run the loads the shippers are sending over, in which case you can broker them on a load board, etc. I mentioned CHR just because its a larger company that most people have heard of. To judge me upon that, sir, you are an idiot. You obviously have no idea what the trucking business is all about as you can't build successful relationships. I'm sorry to hear that, and honestly I would have given you some pointers or even some contact names, but you're not exactly the nicest person on this forum. And as for the S corp, there is no reason why you wouldn't choose S over C if those were your options for a trucking company. It all depends on what your overall business plan is in the long run. If you decide one day you want to sell your company, having a C or S corp will help you out. If you had an LLC, it wouldn't be much of an option. As I said before, just my .02. I'm here to help, but it sounds like your ego is bigger than your wallet. This is exactly how you DON'T build successful relationships. Have a good night buddy.

 

Lot of big talk for the sheeple. Average terms are 35 days to pay if you haul one load a week for your customer it would take about five or six weeks before you would notice a problem meaning all the "extra" money you make would be gone for the years possibly if they went out. You do have the option of going after consignee and any other 3rd party you could touch. Just like you loose 12,600 in pretax deductions if you are a s corp versus a sole proprietor. And for selling a business customers are mostly non exclusive now days so they only reason a company would buy another out is to have better region or area coverage and get competition out of the way.
Since you are here posting I doubt you fall into the category that gets bought out. Just talk for the seeple to adulate over.

 

I only pay $3 for ACH. $25 is expensive.. And the factoring fee I say is 4%... Send bills in by 12 Noon... in my account next morning.