So I might have truck soon and have options

I'm curious I know on here most seem to be against factoring companies and I'm wondering why that is?
OP, because Factoring is expnsive.

Start with your current company, get your footing and knowledge how to run your new company. Then when you have your nest egg and knowledge, venture out under your own authority.
Long term the goal is to keep your expenses as low as possible. This includes keeping as much of your load pay as possible.
Good luck.

 

I don't factor, and really don't care if someone does or doesn't. But to answer your question, I don't figure it like that. For example, if someone factors a $100,000 a year, and pays 3% to factor, they have paid $3,000 to factor and put $97,000 in their pocket. At 36% APR they would have paid $36,000 to factor.

 

After I read this Carriers unable to pay drivers, buy fuel after CoreFund Capital closes I definitely reconsidered how I was going to run my company after starting it a few months ago as I wait for my truck. Capital ('Money in the Bank') is the key when starting any business. It's understandable that some might have $10k to $40k after buying their truck however I always believe in having even more residual cash on hand as a super reserve because anything can happen. Even though I was adamant about running my own Authority and not to lease on with another carrier I had to reevaluated things over with my wife. Factoring Companies can be good but only on a minimum. I believe on borrowing from yourself 1st before going down the factoring avenue if you can. If you have to Factor obtain it (read the contract thoroughly) for non-recourse and for a lower percentage such as 3% for monthly agreement or 3 month agreement at most. Having $50k capital for the 1st 3 months in operation is a necessity in these times because things aren't looking good during this storm!

 

Well that certainly puts it in a different light.

It tends to look less bad when you put it that way.

 

Smart owner operators are against factoring because you are paying someone a percentage to get paid early. Factoring over the course of a year becomes very expensive, and is taking your hard earned money out your pocket.
You need to have capital in the bank to cover fuel, maintenance, break downs and of course reserve to pay yourself when you truck is down.
If you absolutely have to have your money sooner, most companies offer quick pay and take 1.5% to 2%. 3% is too high.

 

If you gross 300k and at least $9000 going to factoring. How much would say 60 days of balance on a line of credit cost in comparison?Once money comes in you should be fine and pay it off. These factoring companies sink their teeth into your business and it’s hard to get released away from them. People end up shrugging their shoulders and keep paying the man because it’s too much of a pain.

Thats not counting fees and such as well.

 

We use factoring because of the time. It’s very easy to upload to the app and it’s done. Otherwise we spend so much time uploading bills, making sure they are paid, etc. and every single broker has their own different way to upload PODs which gets exhausting.

 

Corefund Capital

Reason most are against factoring.

 

We are already there.