Factoring % | What's normal for a starting out company?

Since TQL was used as an example., I will use them also.
The company I use for factoring is APEX. I like the way I get to chose who I factor. If I factor a load from TQL. While TQL owes any amount to APEX I have to continue to send any trips to APEX for factoring. BUT once TQL has paid all invoices APEX has financed. I ask APEX to send a release to TQL in an email. The next day if I chose to bill TQL for a load I can. I do not have to continue to factor any loads with Apex.
On their websit I can research what companies I have factored in the past and ask for a release at anytime for any of them. Some companies I plan .before I book loads. to factor. Some because of the amount of time it takes for them to pay and some because I need X amount of dollars income each week.
I would rather not need to factor any loads but those details as to why I do will not be printed here.
They also have a fuel card. I don't use. They have a load board, I don't use.
The program I am on. I pay 2.5% for 15 days and the rate increases .5% for every 15 days or portion of the pay cycle. The time frame begins the day I submit the paperwork to Apex, not the day broker receives it.
I watch the days to pay with the brokers and when it gets over 20 days I call to see if there will be any delay in my payment. Even thou it will go to Apex, I still keep track.
Be careful with any factoring because it can drain a great amount of income from your stream. There is the factoring charge typical 3-5%. Processing fees. $2.50 per invoice. Payment fees $25 per wire. Last year I spent around $7,000 on expenses from factoring.
Good luck.

 

Your brokers are paying you a little after 20 days? I never see anything below 30 on these loadboards...

 

Xsetra - If you don't mind, can I ask you a few questions about your factor? I'm trying to learn more about the way other factoring companies operate so I can develop better marketing strategies for our company.

Xsetra - What is your average days to pay? It seems like most of our clients receive payment around 40 days.

Are they creating the invoice for you? Is that what this charge is for or is it just an arbitrary fee?

Is this the only way they offer to pay? Do they offer a live check by mail or ACH deposit?


I was also wondering how they handle their reserves. Do they require a certain amount to be in reserve at all times? Do they release weekly, monthly, or on an as requested basis?

 

I quick pay all my loads to be able to cover fuel for next trip. #extremesarcasm

 

Steaburn.
1. Will have to do some research but most bills are paid within 40 days from when I submit. 30 days from when the broker receives. The invoices I don't factor all are paid within 15 days. I have one broker that pays 45 days. I factor all his work. But he pays me over 3 and close to 4 per mile. Minimum run 500 maximum 1200 miles. When I work for him it is usually weeks at a time, real busy. No time for extra paperwork.
2. I create the invoice on their website or I can scan my own and upload it to their paperwork. The $2.50 is for the submittal of the RC and POD thru the Tripak Express envelope. Every load I factor I have to send them the original BOL/POD.
3. They have check by mail, ACH. WIRE, They might even pay direct to a credit card if you want. They are pretty cooperative. I think the $25 is just a cost of processing. IF you want to be paid the same day of submitting the paperwork it cost an additional $25 for quick quick pay I guess. I wait the extra day.

4. The reserve. When the bills are initially paid I get 90%. They hold 10% the reserve. When they get paid I get the remainder could be 6.5-8% . Technically it could be as high as 5%. My average cost is 3.14%. I see it as cheap staffing. I just closed my office this last winter and save $500 per month just from phones, internet and electric bills. Back to the subject. The reserve is given to me upon request whenever I request. No minimum balance is required. If I don't request the reserve it is automatically put in with my first funding of each month.

 

why don't you ask or a 95%. More money up front for you also the wire fee should not be more than $15 that is what the banks usually charge.

 

I'm sure you could ask for the moon. Doubt you would get it. They have their fee schedule and I just go with it. I guess if anyone doesn't like the fees they ask for, they don't mind if you go somewhere else with your business.
Good idea to ask. I just haven't.

 

This is a really informative thread, worth the B U M P to keep it alive^^^^^

 

The company with reserves and fluctuating fees structure is a pain in the butt. The best companies are with flat fee up to 60 days. For example the company I am switching to is 2.75% with no reserve and the same deal, you choose who you want to factor and can stop any time. Free ACH and no other fees.

 

Why is factoring such a big business in the the trucking world?

If people are running their own truck they have a lot of money invested to get to that point how can they not be able to cover fuel, etc for 30-45 days?

In my business our invoices are five to six figures and it often takes 90+ days to get paid. We also have a lot more expenses than someone just running a truck. We run the truck and have employees, motels, per diems, etc. It isn't that difficult to mage it with a budget. Do people normally live that close to edge?

I don't consider myself wealthy but I am very cautious with my money. I don't think I have had less than 10k in my savings/checking account in the past 15 years.