FACTORING

I only use QP with two brokers – Landstar and CHR. The fee I pay LS is more than covered by the fuel discounts. CHR direct deposits into my account usually within 24-hours. Both are 1.5% with some little fees added by LS. Willing to pay the fee with CHR to simply not have to ever worry about calling on an invoice plus they want originals sent and I never send originals by regular mail. So the fee is off-set by time and headaches avoided.
I would use a recourse factor for some of my invoices if they didn’t have the sliding scale. It just seems like an incentive for the factoring company not to get paid in 30-days. If they have done their job on credit screening and collections then this should not be an issue. What even seems fair is to provide a scale and say “Broker X is paying in 40-days so the rates is 3% and Broker Y is 30 or less so it is 2.5%” .
Then the extra fees. I have had one broker in the past 3-months ask for originals. And that was someone that I use and it was one specific customer. I can even understand wanting the originals for back-up but why not let the carrier send those in batches on a monthly basis to avoid additional mailing fees.
Let us not kid ourselves here. Many carriers that factor are doing it for cash flow reasons. And they are not in a position to provide push back on all the additional fees. I would likely factor most of my invoices to avoid the invoicing and collects. Red made a good case to me on this. But I haven’t been in a big push and of the ones I have talked to it does not seem that they are all that interested in being more than a bank and the invoicing, collections and having a structure that reduces fees.
Please feel free to PM with contact information. If your company is in a position to be flexible on ways to keep fees down I would like to talk to you.

 

BBB,
CHR and LS sound like they provide a great QP rate and very low additional fees. I understand that CHR normally pays in 30 - 60 days, so if we assume 45 days, then you are paying 1.5% to get your money 44 days sooner...an awesome rate!

The sliding scale may seem like an incentive to allow your customers to stretch payments, but factors always prefer to be paid sooner, because it ultimately reduces the cost to our clients, which is a major concern for everyone. Unfortunately, it would be incredibly complicated to offer different rates for each of your customers based on their respective payment patterns. I would suggest the following: say you and your factor could agree that your customers pay in 45 days on average. They would base their rate on that time frame and then adjust the rate periodically to reflect the actual payment patterns. By that time, you should both be comfortable that the rate properly reflects the payment delay. I can't think of a more fair way to do it. To minimize costs, I would suggest doing business with a factor that is located close to you so you can physically drop off BoLs and invoices. Funding can be done by ACH within 24hrs. Keep in mind that the rate you get will depend on expected monthly volume, term commitment (if any), etc.

As for back-up, it is important for the factor to have originals because factors have in many instances lost money from clients that (fraudulently?, innocently?) sell the same invoice to two different factors.

We offer competitive rates with minimal additional fees, but we're not always the absolute cheapest. Our clients know they might be able to get slightly lower rates elsewhere, but don't want to be "nickel-and-dimed" and moreover, they appreciate our service/advice.

I'll PM you with my contact info...hope to provide you with info to make the best choice for your situation.