What happens to you guys during a recession?

I see, yea for 3% I'll wait the 3 weeks for my money.

 

I don’t know anyone that pays 1%
I’ve always seen 3 to 5%

I still stand by my statement. It’s about cash flow. If you have to factor you should t be adding more trucks is what I’m saying.

 

Pretty much any factoring company will give you rates I posted above, just call around.

Why not? For example you can lease on 5 owner operators tomorrow without any investment or saving up enough operating cash and assuming you have enough work, factoring fees won't be bothering you.

Here is a typical example of a spot market company in Detroit or Chicago. A dispatcher leaves his company, opens up his own and brings 5 o/o's on board. The charge is typicaly 10%, so assuming trucks gross $100k per month, the guy gets $10000. Out of that $10k, $2k go towards factoring fees, so he still has $8k leftover.
Banks wouldn't loan that guy enough operating cash, but with factoring opening that kind of company is not a problem.

 

For the first 6 months maybe a year, after that you're not financially stable handing out nearly 25k a year to have your money sooner. If you need an operating loan you're not financially stable, the one exception to that would be an operation like a farm were you don't have income for more than a few months out of the year, and even that don't make a heck of a lot of sense to me.

 

I feel like you did not even give a thought about the example what I wrote above. Factoring allows rapid growth without any investment. It doesn't matter how much you pay in fees if you still make more to offset it. Without factoring you wouldn't be making money at all, since it would take ages to save up enough operating cash to add few trucks

 

Just like a building, the faster your buisness goes up the faster it'll burn down, I've seen it firsthand multiple times.

 

Basically You do whatever is needed to survive. Everyone is affected by a recession. Werner downsized in 08, because they aren’t going to run Trucks around for no profit. The rates soon bottomed out, and started going back up. I know of some who had very Profitable Operations, that got down to almost nothing, now they’re back, stronger than ever. They are very Good at this Bussiness. Still lost almost everything. If it ain’t there, all the planning, and Bussiness Principles are just a bunch of talk, ideas and opinions.

 

With buying trucks yes, but with factoring and leased o/o you don't. You have no financial risk.
Many people have this kind of business and I feel they play a big part of the bad rates on spot market. It does not matter much to them if o/o grosses $4000 or $5000. It's not worth it for them to spend lots of time to fight to get that extra $1000 ($100 profit for the dispatcher),if instead they can load truck number 6 and get $400.

Again, for those company owners factoring is a godsend option, for everyone else not so much.
Tons and tons of immigrant companies operate that way simply because many people dont speak good enough English to book their own loads. Usually its one guy loading 10 drivers who speak English only enough to get a CDL.

On top of that those companies usually lie to the drivers how much loads really pay. I know a guy working as a dispatcher in a Miami based company. He gets $500 per week base salary and 30% of the cheating amount. So if he books a load for $2500, an o/o is told they got it for $2000. Then dispatcher gets $150 and company gets $350. That is on top of 10% from the $2000.
So basically o/o gets $1800 from the $2500 load.
That is just an example. In 2018 they were making crazy money, keeping o/o's stable at $2 per mile and keeping the rest. Like they would get $4000 for a 1000 miles load and give o/o only $2000

 

So if you no actual investment in anything why in hell would you be handing that sort of cash over to a factoring company on a permanent basis? I get why you would do it on start up till you had some cash on hand but after that it makes no sense.

 

Well, how long would it take you to save enough to pay owner operators every week while you wait for the money?
You also will have to call brokers, check on payments, bla bla bla. You can use that time to load another truck, have factoring company to deal with all that and have cash flow security to pay your o/o like a clock.