Factoring companies: which are good? What to look out for?

hmm...but I dont understand, since quickpay is paid after the delivery anyways, how does it provide any type of security blanket?

 

By taking quick pay for brokers with weak credit or extended pay periods you know your payment is secure, less the percentage and your not having to worry about the company tanking. Thereby never getting your payment over the Net 30 terms.

 

No business can survive without cash flow, even if maintaining that cash flow costs them a little profit. And, it isn't just the small carriers and independents who use quick pay. If you are in business you want your money. If you don't use quick pay, it could easily take 45 days to receive your money from the broker when the load was delivered. Not all brokers take 30 days to pay, but some require original bills before paying the carrier. It is expensive to send bills overnight. I think the last over night letter that I send cost me over $30. If you use snail mail, it can take several days from the time the paperwork was mailed until it is received by the broker. It could then take a few days for them to process the paperwork before your bills are put in process for payment. If the broker pays in 30 days, you could be 35 or more days before the check is actually mailed. If they use regular mail then it could take another 3-5 days to get back to you. At that point, you are looking at 40-45 days, providing there are no problems with your paperwork.

Many brokers are using Transflow or faxed copies rather than originals. That can cut the payment time down, but you still have the waiting time and mail back to you with a paper check. By using quick pay, most of the process is electronic. Bills are sent by fax or email and then the broker electronically transfers your payment, less the discount, directly into your bank. When a truck is running you can easily burn 100-125 gallons of fuel each day. Add maintenance and other operating costs and you could get stretched out before you receive payment without using quick pay. We are not even discussing any delays due to missing signatures or paperwork. Using quick pay means that you don't have to use your own resources for as long as you would by waiting to receive payment. Offering quick pay enables brokers to move more loads and it is attractive for many carriers to maintain their cash flow. It can also give the carrier a level of confidence that they won't have to chase their money and that the broker is solvent.

 

GMAN nailed it!
Factoring companies also exist in much the same manner of not requiring originals, with full flat rates with non recourse or holdback to protect yourselves from companies that tank....ask me how I know😄

 

5% for 30-days net... 60% APR. Yep... a real good deal. Why don't you offer that to the next used car salesman you do business with.

 

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Okay, I understand why carriers need money sooner than later, but the payment security part is still unclear to me. Why would a broker be anymore likely to pay if it is sooner after you dropped off a load than 30 days after the fact? Does that make sense? In other words, I cant tell why a carrier would be anymore likely to get paid using quickpay than forgoing quickpay.

 

Good lord?! Who are you dealing with?? I'm sorry..ironpony

 

Because the brokers will pay sooner in exchange for a percentage of the line haul...so they make even more money by paying you on average 15 days sooner by the time they mail you the check...also by taking quick pay with brokers that may be struggling to stay afloat you know your money is coming sooner helping to ensure you get paid before the broker goes out of business.

 

Any factor charging you 5%... 5% per month x 12 months = 60% APR. It's expensive money, no matter what your excuse is for taking it.

 

I mean if you consider .05 cents on the dollar expensive money..I guess I'll take your word for it...?