Well you might want to take that math curse too.
If the terms are NET30, then it it the functional equivalent of 36%APR. If it's a NET90, it's the same as an APR of 12%, which is still huge.
BLACKLISTED
Discussion in 'Ask An Owner Operator' started by Beaver9, Dec 6, 2021.
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So, let's say you generate $50k per month to your truck. You sell all of your invoices that are payable to you at net 30 (Assuming you know what a payable in net 30 invoice is) at a 3% discount. You will receive $48,500 for the $50,000 in invoices from a factor co. Therefor, you are giving up $1,500 that will go to a factor when they collect from the Shippers/Brokers the full $50,000 from the invoices. YOU DO THIS EVERY MONTH YOU PAY (or you are giving up on collecting on) $18,000. PER YEAR. Ready because here is the FUN PART- for the Factoring Co., $18,000 divided by $50,000 is equal to 36%. Yep, they are earning 36% on money that cost them about 5%-6% a year.
Now here is a little Fun Fact- Brokers have to have a Performance Bond to be in business. This is what happens if they go titsup and don't pay, you may have to wait to post against their Bonding Company that will take far longer than 30 days, but you will get your money. And believe me no Freight Broker will ever want you to file against their bond because they pay a fee for that Bond, and it will go up in astronomical rates if they ever pay a clime. Oh, and if the Freight Broker files Chapter 11 Guess who is first in line with the creditors to get paid - the Bond Company.
This is not about MATH it is about FINANCE.Beaver9, ZVar and ProfessionalNoticer Thank this. -
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I loved the old 2-10 net 30 Invoices that was the fasted check I would write to get the 2% discount by paying in just 10 days.
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Now, I'm waiting for Ease Logistics to pay. It's 40 days. Not sure if told the truth, but they said it is being paid today.
I will follow up tomorrow to see if they have done it.
Edit:
Called again to ask for the copy of the front/back of the check. I was told that ACH will be wired instead. So, funds should be coming tomorrow.Last edited: Dec 27, 2021
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Trucking Jobs in 30 seconds
Every month 400 people find a job with the help of TruckersReport.
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