Whats a good factoring company?

Most large brokers will do a quick pay program for less than 5%. Honestly though with as tight as profit margins are now adays on trucking factoring is not a very desirable way to go. It may be a better decision to wait a little while to open up and save up some operating capitol so you can wait the standard 30-45 days for payment and not throw away the extra money. if you do a 2500.00 load and factor it at a say 3% that equals out to 75.00 you are giving away, if you do that say 100 times through the course of a year that is 7500.00 dollars of your hard earned money in some one else's pocket. Also you will find that alot of factoring companies have it in their contract that if they are un able to collect the freight charges that they will come back to you for the payment, so there still is a risk to you. that is just my advice and best of luck to you.

 

Deskdriver is correct in that many brokers will factor for 2-5% of gross revenue. But in case you need a factoring company, I use TBS Factoring Services. They are family owned and have been in business for over 30 years. http://www.tbsfactoring.com/get-paid-go?gclid=CN7bkcqy3boCFQLl7AodR0oAXw.

They are also teamed up with Getloaded.com and if they factor a particular broker it will be listed on the information page. You can also call and get credit ratings for a broker before you do business.

 

I would check around with different factors. Rates and fees vary. This is not a one size fits all. Some want you to factor a minimum amount of revenue per month. Others want you to pay a fee in addition to their percentage. Some factors want you to factor all of your receivables while others don't. There are non recourse and recourse factors. Some do both. Unless you need to factor all of your receivables, I would go with one where you don't need to factor all of your receivables. If a broker offers quick pay for a lower fee than the factor, I would go with quick pay. Most brokers who offer quick pay have fees that are lower than factors offer. I look at factoring a little differently than some. Factoring allows you to keep your cash flow up. You cannot survive without cash flow. I have known some very successful businesses that have failed due to lack of cash flow. With many companies, factoring is a cost of doing business. If you cannot afford to factor, then you are probably running for cheap rates. Fees do eat into your profit, but it is better to give up a couple of percentage points to keep the cash flowing than to have to sit until you get paid. One aspect that I like about most factors is their credit reporting and checking. You should never haul for a new broker or shipper until you check their credit. Just because a company is large, doesn't necessarily mean that they pay their bills in a timely manner. A factor won't usually take a receivable without first checking credit. If nothing else, you can see how the broker or shipper pays the factor and then later leave the factor and do your own billing. Unless you deal with a factor that has credit checking, you may want to use a credit reporting service. I always check credit and references on any new broker or shipper that I don't do business. That is a cost that the factor absorbs, if you do business with one.

You may also check on obtaining a line of credit from your bank rather than using a factor. The difference between the two is that the bank will need to be repaid whereas the factor won't. A factor will stay on top of your receivables. The bank won't. It will be up to you to call your customers to remind them to pay, if you don't get your money right away. D & S, TAB, TBS and Bankers (?), Riviera Finance are a few factors to get you started.

 

TFS, they are one of the better ones. Ask for Mark Baker.

Also, big difference between the factoring companies that do all the advertising and hard sales push and ones that think of themselves as more of a B2B service.

 

Ibuse tbs for the last 2yrs, but may try pc for the savings. I have the non recourse because I deal with same brokers. It is a small price to pay for money in ur pocket today. All u have to donis increase ur rate to cover factor fee.

 

We use Advance Business Capital and are very happy with them. They have a 4.99% full advance non-recourse program for 1 truck and a 3.99% full advance, non-recourse program for 2+ trucks. We do >$100,000 per month in volume now and are down to 1.9% with 95% advance for full recourse. They also matched the 1.5% quickpay fee from Landstar and CHR. We had to use a competing offer to get our current rates.

 

We used TBS but as earlier mentioned, if you are just starting out, your best bet is to save up or have enough operating capital so you do not have to use factoring or minimal use when needed. If you can rethink your mindset from considering factoring to be 2% to 5% of your gross revenues, which seems small, to what it really means to your business, 30% to 50% or more of your net income, it will change your perspective. It can be like crack... once you've started on it, you'll never get off it. And if you also think about what 5% on a $1,000 load really is, you'll feel like you're taking payday loans. That 5% equates to the interest for a 30 day loan (average receivables) so multiplied by 12 months, that's a 60% APR. If your bank offered you an operating capital loan for 60%, you'd scream.

Best advice I could give... have the $25K to $35K per truck in operating capital in the bank before you start or you'll be hard pressed to get ahead as you grow.