30 day pay rule

insurance (inˈSHo͝orəns/) noun
A service the wealthy sell to the rich

 

how much do you give for leasing on to a carrier???? as most o/o's would rather do.

 

There are reasons other than lack of capital as to why one may chose to factor. Some factoring companies offer a discount fuel card as well as discounts on other items. Your assumption of 5% is completely wrong, a company can choose shared responsibility for a lower rate, 5% is for non-recourse. If you are factoring 100% of your invoices for a rate of say 3%, but receiving roughly a 10% discount on fuel & other items, who made out better in the end? Lets do the math:
$100,000 revenue, 50,000 miles, @ 3% = $3000
50,000 miles, 5.5 mpg, 9,090 gallons of fuel, $3.50(no tax) fuel, 10% discount = $3,181.50
The guy factoring is ahead $181.50, not including any other discounts. Before anyone chimes in with numbers, I used these numbers for example only, discounts could be more, or they could be less, I am assuming the guy not factoring has no discounts as a 1 truck company, & (no-tax) is just what it states, no taxes figured in, and fuel economy may be better or worse, & pay may be better or worse!!

 

Some of you folks missed something though........

When you factor an invoice then you took your money ( most of it ) and gave the factoring co. the right to collect from your customer. The factoring co. will take your invoice and put a big red stamp on it that says don't pay him, pay me or debt reassigned or something like that.

Your customer ( brokers included ) are going to see this as poor money management and not want to do business with you........for if you can't carry my small invoice then how do you keep your equipment up?

Not saying there are not times when it's essential like dealing with a new broker or a TL from BFE getting you back into profitable lanes or even after a major set back has cleaned you out.

But as a rule I would avoid it as much as possible. You can also ask your customer / broker how they would respond to a factored invoice.

JMO

 

When I factored I had never, not one time, had this happen, it was never a issue. The assumption that someone can't take care of their equipment or a customer won't load them because they chose to factor is delusional. Again, people may factor for reasons other than money problems. Less risk, help with collection if needed, newer customers, discounts, & help with billing to name a few. I would take my chances on a factoring company seeing a issue and collecting on a bond, faster than a one truck outfit would.

 

Looking from the outside. Factoring is good to avoid getting in with a month of operating cost and then finding out they won't pay.

 

Well..I dont lease equipment on to existing carriers....25% is the norm.(Keep in mind the carrier assumes all the risk and provides the operating authority and liability insurances)

Thats why most leases are 75-25


Im in this business to have Strength in numbers with my own pool of customers....By Leasing on to an existing carrier........You are really no more than a glorified company driver with your own truck,,THEY CALL ALL THE BUSINESS DECISIONS


Now, Back to the oroginal topic, To each their own on factoring, I personally do not want an outside service collecting my invoices for a fee..I SIMPLY DONT

You lose somewhat control of your operation and the sense of security amongst your customers......

Yes,Im Old Fashioned,But its the only way I conduct Business

 

That's the point of my statement.......

 

I want to chime in with my thoughts on this subject.I think factoring is just another aspect of helping a driver out.Like Credit is.Been reading different post and some O/O say pay cash for everything and some say hold on to your money and Finance it.Guess it depends on the financial situation and whether you trust the Shipper to pay you.My .02 cents in the matter.I Am a long term company driver that makes great Money($87,000 a year) in the LTL business but I think I want something different to do now.Most call me Crazy but hey,Who owns their own business in this day and time and Isn't a Little crazy anyway.Just trying to find a Medium in this O/O business's.Don't think I would have to factor starting out but I will Never say Never