Stepping Out With My Own Numbers

I'll be stepping out on my own numbers, probably around the first of the year. I know the concept of factoring, but don't know the details of how it works.

 

It's basically legalized extortion. They hold onto your money as long as they can unless you pay them a percentage of the money. I'm sure it had its place back in the day when we had horses delivering letters and stuff, but there's really no excuse for it in the digital age.

 

There is no need to factor if you can go by without collecting 100% of your payments in the first 30 days. Especially for one truck operation. There are quick pays available from brokers - less costly (1.5 - 3%) and less commitment too.

 

Basically,
1. You drive a load for $1,000.
2. You send the factoring company the BOL's + any lumpers + an invoice for the total amount (either the $1,000 or say $1,150 if you have a $150 lumper).
3. The factoring company gives you (usually by wire/direct deposit) $900. They hold onto 10% of your load. It's their (usually) 3% fee + 7% in "reserve".
4. They bill the broker
5. Broker pays in 30 days and unless there are issues, the factoring company puts your $70 (7%) into a reserve account that you can get wired/deposited whenever you want. They keep their $30 (3%).
6. If broker doesn't pay, they take back their $900 that they "fronted" you, and you get diddly squat/ have to figure out how to file on the broker's bond.
7. They make you sign a document stating that you MUST factor EVERY load that you do through them.
8. If you want to cancel your "deal" you have to be very careful because there is a specific time frame that you can legally cancel your contract and if you don't do it in that specific time frame, you are stuck with them for another year.
9. You also have to be very careful with the credit rating of the brokers that you book loads from because there are certain brokers that the factoring company will flat out refuse to factor so you would be stuck having to bill them directly and would not receive your money quickly.

 

Was it the agent out of AR that starts with a 4area code?

 

That one in AR from my experience does a lot of copy and paste loads. I honestly don't think they have any of their own freight.

 

It just depends, LS has 230 agents in Arkansas, many are owned by the same guy. Some have crappy broker loads. On the other hand some have some Very Good paying freight. It is difficult to learn when to answer the phone and when to let it go to Voicemail.

 

I almost headed to Alaska this weekend out of ft Stewart but couldn't get them to come up just a bit more, tho they did come within 2k of my number. Too many guys run these loads as an expense paid vacation.