No. It's just not a sound business practice. Nobody is saying that you need to be rich. But common sense says you need to have enough reserve capital to run your business. Factoring is a crutch. That let's poor operations. Keep running. It's much different. Than say hiring an accountant to handle your account receivable/payable. It's literally saying loan me some money. Because I am too poor to wait 30 days to get paid.
Factoring - What's normal and is it worth it?
Discussion in 'Experienced Truckers' Advice' started by wildbill_az, Feb 2, 2022.
Page 3 of 5
-
-
Trucking Jobs in 30 seconds
Every month 400 people find a job with the help of TruckersReport.
-
Dino soar, gekko1323 and Wasted Thyme Thank this.
-
-
Questioning the long term need to factor isn’t gatekeeping. Before I was in trucking I sold receivable financing (factoring) to small businesses in the late 90’s/early oughts. They were financed through local community banks and they were always more expensive than a line of credit. Receivables usually turned (we’re paid) from 45-60 days and the rate was usually 3.0-3.5%.
You get on here and there are folks that will tell you absurdly low (I.e. fake) factoring fees.
Bottom line is this: Factoring is never more profitable than using your own savings and saving up enough money so that you don’t have to factor isn’t impossible.Dino soar, RockinChair and crocky Thank this. -
Last edited: Feb 4, 2022
-
NorthEastTrucker Thanks this.
-
Dave_in_AZ Thanks this.
-
I'm a rookie O/O whose authority only went active this week, but I'm going to give NOT using factoring a try.
First off, you multiply that monthly rate of 3% by 12 and you get something like a 36% yearly interest rate? That truly is a huge, payday loan style hit. Secondly, I'm getting a free broker credit rating lookup service through OOIDA, and I'll be using it. Next, if a broker doesn't cough up I won't be going after him, I'll be filing a claim with his bonding company. I've read (here, thanks!) that this tactic can be extremely effective. And lastly, I do have some questions about just how many of the people in this thread sowing fear about not being paid have actually experienced this themselves? Or are instead just passing on apocryphal horror stories. I guess I'll be finding out soon enough...Last edited: Feb 6, 2022
-
I couldn't get out. HOSTAGE. And if they know you want to get out, they might ruin your relationship with brokers.
I had one lying to the broker! If the broker doesn't pay in 90 days, they will take the money they paid you. So, it's more like a loan.
Everyone paid. But if there is a problem, the factoring company won't solve it for you.Dave_in_AZ, Deadwood and seamutt Thank this. -
Trucking Jobs in 30 seconds
Every month 400 people find a job with the help of TruckersReport.
Page 3 of 5