Factoring companies?

No contract, you can pick what brokers you want to factor, no minimums and no reserves. I pay 2% with 3 trucks, for one truck it' was 2.75%

 

It's for recourse. All approvals are done via website, takes a minute

 

The reason you got that is: you asked an unqualified question then got mad when someone pointed it out. Unqualified doesn't mean you're stupid. It just means you don't know how much you don't know. The madder you get, the less help you're going to get here, so calm down before you miss the bigger picture.

Most people who could even answer this question have dealt with one or maybe two factoring companies ever. Then, out of those, 80% of their bad experiences were due to themselves not following the terms of the contract they never read. Truth be told you're not going to get a good answer, or one that would apply to your case even if it was a good answer.

So where does that leave you? I'll try, and if you get mad I hope they close the thread and ban you.

Who has the best offer? Instead know what to look for and what's important or not.

First off, factoring isn't a dumping ground for deadbeat customers. They don't want that business either, so don't get the idea they'll just take it. If all the business you send them is crap, they'll fire you as a customer. Or, shred you with penalties and interest until you either start screening better or get mad and quit. It's not easy, fast money. It's a financial relationship even more impactful on your business than your bank.

Either way, to quit, any unpaid invoices will have to be settled, and then another 6-9 months pass to be clear of all claims. This isn't like getting grandad's .38 out of the pawn shop. Quitting a factoring company has some really long, expensive, time consuming strings attached.

So that covers the extreme downside. Lets talk about recourse vs non-recourse. #1 non-recourse only kicks in when non-payment happens because of customer bankruptcy. It doesn't cover anything else, which is more likely: slow pay, fake claims, you name it. End of the day, you own that invoice and have the obligation to resolve those things to get paid. Period. The factoring company is loaning you money in lieu of that payment. They will make some phone calls to collect, but don't know diddly about what actually happened with the load. So only you will have the knowledge to deal with it, settle any claims, and get paid. If it comes down to a bond claim to get paid, that's all you and not included with factoring.

So what does that actually mean? Even if you have a non-recourse deal, a collection on a customer that isn't bankrupt, that goes over 60 days, will most likely just get charged back to you. So you never lose the need to screen your customers, and the factoring company never will own that. In 10 years and 1,500 invoices, I've had to make bond claims 3 times. In all 3 I was paid immediately once the paperwork was turned in. The less favorable terms for non-recourse are not worth it.

Getting back to the bad news. When that charge back happens, you usually will get very short or no notice. Then they will "collect" the outstanding way past due invoice against advances you requested yesterday. For example, you'll turn in a new invoice, thinking you'll see money in your bank the next day. But instead, you will get an offset notice telling you that advance you thought you were getting has been applied to an uncollectible invoice, and zero deposited in your bank. That's how they do it.

If you still want to do this, then do the following. I think a one truck new business may be able to get 3% but you'll have to make a lot of calls to find it. More likely will be 4% or more. Most will take a 10% reserve on funding and release the balance after fees each month, sometimes more often.

1. Read every line of any agreement you're considering. Focus on the sections labeled "Default" and "Cancellation." Understand what will be considered a deal ending action, and what the consequences will be.
2. Watch out for a lien on all your personal property for security and make that a deal breaker. You will get a lien, actually a UCC filing against your business. That's customary and secures your "loan" with company assets. That's ok. What you don't want is to secure that with your home and everything else you own.
3. Forget about non-recourse. It's not worth it.
4. Assignment by customer is best. That way you can still bill some customers direct if you want. The assignment can either be done that way (by customer) or a blanket assignment. You don't want blanket assignment. Then all your business is included whether you like it or not.
5. When you get it narrowed down to one you're liking, ask to speak with an account manager and be ready with some everyday questions. Salesmen tell lies to get your business. Account managers usually keep it real. Ask what to expect on the process. How you submit invoices. How fast is the turn around on funding. What are all the fees if you didn't get a rate sheet. That sort of thing.

I didn't give you exactly what you asked for, but what you needed to hear. I hope that helped.