Factoring math...let's not make it convoluted.

When you factor you have less of it to work for you. I have been on my own for a long time, I have yet to “chase down” my money. In this day and age it’s easy to check a brokers credit. If someone has trouble getting paid then they are working with the wrong people.

And when things go south those publicly traded companies are the first ones with their hands out. Something to think about.

 

I don’t owe anybody a dime, and haven’t for several years. Back in 2002 I had a partnership go bad, I was deep in debt and almost went under. After a few years of fighting though that mess, I vowed to never get in that shape again. I don’t owe anybody anything, I want a new truck, trailer, or other piece of equipment, I save up and pay cash. I don’t factor loads, I don’t borrow money.

 

The factoring company is the one that makes 102%.
They use the same (in this example) 5,000 52 times.
Therefore, they make 100 dollars 52 times for a total of 5200 dollars and they still have only used 5000 dollars to make it.
They now have 10,200 dollars in their account at the end of the year and only used 5,000 dollars to make it.
The reason people get confused is because they are only seeing what it costs them, instead of the real cost of the money, which is what the factoring company gets.

 

Are you talking to yourself Joe? You might need to get back in the truck. Your going stir crazy at home. LOL

 

I did not read the whole thread, but here is my take on factoring.
If you are a single truck show, sure you can be totally fine with your own money, however factoring makes things easy if you decide to grow.
For example you lease on an o/o. Charge him 12%, pay 2% to factoring and keep the rest. Factoring allows you to grow overnight and not having to worry about cash flow.
To run a 10 trucks show you gotta have a lot of cash reserves or get a huge loan from a bank, while with factoring you get less of a financial risk and can keep your owner operators happy paying them every week.
Plus when you go over 150k in receivables, you will pay less than 1.5% to factoring

 

1) People who want to “grow overnight” aren’t typically ready for the pop quizzes life throws at them because they have more ambition than wisdom.

2) Having $25K in savings also lets you grow without worrying about cash flow but it requires discipline in order to save the cash.That disregard of discipline in favor of shortcuts has consequences.