good Non-recourse factoring

I understand that completely, and I wasn't trying to beat you up over it. I understand that everyone can't get credit from banks due to past mistakes.

Some people look at factoring as 4-5% and think that's not bad, when in reality it cost much more than that.

 

Wait a minute...I actually got lost. If ,let's say, all invoices factored amount to 100K a year and the factoring rate is 4% then the yearly factoring cost is still 4K not 48K. It is confusing in suggesting that the factoring "loan" lasts 12 months instead of one time "per invoice" charge.

I get it, that a credit line of 20k at (let's say) 8% APR would be enough for not having to factor (per single truck at least) and it will cost $1600 instead of 4K per year.

 

Love how all these truck drivers and owner operators can't do math

 

Try to think about it in reverse...
Can I give you 100 today and in 30 days you give me 104?
Now repeat it every month....
Why would you ever do anything else?

 

The factoring percent (3,4,5) is only for 30 days usually. After 30 some companies raise the rate per invoice also.

30 days=1 month x 12= the apr rate. Close approximation.

 

I understand that. I just don't like to compare factoring charge to an APR. Technically, it is one time charge per invoice. It means you sell one invoice per 4%.
On the other hand, from a factoring company angle it is 48% per year (based on ScooterJones example). That's true. That's how much they regain on their working capital per year.

A capitol (with an o) is a building that houses a government's legislative branch.
A capital (with an a) -money, but not only....
ha ha ha!

 

The math on 48% apr is correct, I know it sounds better and makes people feel better to say 4% but the math doesn’t lie.

I understand factoring if you are trucking along and something bad happens where you need cash now to keep from filing bankruptcy, but to use factoring as part of your overall business plan is not a sound plan.

 

I don't factor and loathe factoring companies and credit cards. I think little of bankers, for that matter too. So I should like to say 48%. But the 48% is only good for the illustration purposes only to serve anti factoring propaganda.

The term APR makes all the confusions and it should not be used.

For example:
When you sell a house, your real estate agent's commission of say 4% is not APR but a commission. One time event. There is not a time factor involved in the equation. Selling your invoice for 4% of its value is not dependent on time factor either.