Factoring Companies

all you have to do is read

 

I hope no one has signed this agreement.

First, they have "additional" terms hiden and changable behind a password protected site. Then you give them first lien postion on everything you own. And if that isn't enough you have items that need to be complied with that if you don't you release them of their obligations. i.e. - non-recouse will turn recourse. And I am not talking about truning in all you documents.

Don't forget that you allow them to debit your accounts with no notice and no recorse if it is an error.

This is not a contract to protect both parties. This is a contract to protect them from paying bad debt.

 

Bill - the lien mentioned on section (a) in the first paragraph is against the accounts you factor. They're saying if you go bust or quit them, they still have rights on those. Not unreasonable. As far as them having access to the account, that one's easy. I have a separate transfer checking account. As soon as money clears it is swept out to another account. That said, their access to an ACH account is common practice for even quick pay agreements direct to brokers. In any of those arrangements you probably have more risk of them pulling money off your fuel card anyway.

Edited to add: I've got a call in to get my login info for the T&C link you mentioned to verify this. If memory serves, it only adds the specific rates, fees, and terms related to your specific program as they have many offerings. The important stuff about security, account ownership, etc is as BayouHS posted.

 

Seller and any signatory acknowledges and agree(s) without limitation; (a) to granting Purchaser inter alia a continuing first priority interest in and to the Collateral (including but not limited to Seller's currently existing and hereafter arising accounts) to secure the Seller's Obligations to Purchaser
Inter alia - amongst other things
Including but not limited
Individually these terms grant more than the invoice you factor as collateral.
I agree, you need to have a sweep account if they are depositing via ACH. But even that is not complete protection. I would talk to your bank about blocking out bound ACHs and perform those from another account.
You will also notice they make sure that you are not using a payroll account. The few banks that I have dealt with in the past will block transfers out of designated payroll accounts or at a minimum check to see if it is authorized. Not to mention all the laws protecting payroll.
When dealing with transfers of payments via ACH having terms to allow reversing transactions because of an error is common. But what is also common is a notification that it is happening with documentation to the error. The terms keep you from blocking a legitimate transfer.
These terms protect them from you if they make a mistake or decided that they needed more money on deposit for projected bad debt.

 

Anybody deal with Freight Capital?

 

We have been using TBS out of Oklahoma. I have been very happy with their service. Their cost is 5% for non-recourse and an advancement program available.

 

I use APEX and am pretty happy. It is a recourse program but the percentage is 1.5-3.5 % and they have a fuel card with kick butt discounts that help defray what it cost in factoring fee's. If you need the cash flow (which I do right now) and have to factor I would recommend them.

 

I'm currently using D&S. Non-recourse, 5% flat fee. No term. Very few details to decipher. They have been as helpful as possible and I would recommend them.

I am seeking alternate financing as well, and do not factor all my loads. The hit overall is big, so not be ultimately dependent is my first real goal.

 

Just have to give a shout out to D and S factors. I was lucky enough to secure my own financing, so I was not needing D and S's services as often. Unfortunately, a shipper (who also utilizes a factoring company), made a few mistakes on their end and payments that should have come directly to myself, were misappropriated to D and S. now, they don't make a cent helping out in a situation like this but they were so accommodating and expedited reappropriation immediately. They were so professional. I must specifically thank my rep Crystal L. Who put up with a slightly frantic woman : ) I can't recommend them highly enough.

 

Reviving an old thread, but have a question on this factoring game. I have heard that when a shipper finds out you are using a factoring company many of them will not use you to haul another load, because they do not want to deal with the factoring companies harassing them for payment. Does anyone know if there is any truth to this?