Getting started as OO, should I factor?

Great read!

 

I think 5% for a factoring company is on the high side. I've seen others talk about different companies and are in the low to mid 3's

 

Yea i read too, also seen some advertising that 3%,

 

5% for non recourse and 3% for recourse, these are usual numbers

 

Dune-T your right about that.

 

If your profitmargin is 6% and you have to pay 5% for factoring...........not much left.

If you do it to keep your cashflow going,then there is something wrong with your setup.

 

I think a 6% profit margin is a red flag.

 

Oscar,6% is the minimum shareholders worldwide find accepteble.
Would like to feed all the O/o on TTR that aren't making 6%?
I know i wouldn't.

 

There is nothing wrong with factoring, but I would not consider doing it for the long term. I factored at one time. The factor I used was non recourse and the arrangement I had with them allowed me to only send them the receivables that I wanted. I have not factored for several years. The advantage to factoring is that you improve cash flow without borrowing money. Many of the better brokers offer a "quick pay" option where they pay you within a day or two for a discount on the rate. The discount is usually much less than factoring and you keep your cash flow up. I have been fortunate in only having lost $1,200 on a load and that was probably 15 or so years ago. Even in that case, I think it was more from a misunderstanding than the company trying to keep from paying.me. I am very careful about giving out credit. I always check credit on any new company before doing business with them. It is worth the effort. I have a handful of companies that I primarily do business and have a long standing relationship, so collections are not a problem.

 

I can believe that, but when you are talking about a company that is large enough to have shareholders its a little different than a one truck operation.

Neither would I.