Can Someone Explain Factoring? How Does Factoring Work?

It was edited by Allow Me, who is a moderator. Maybe a little spammy? Took out an email or phone number? Send a PM and ask.

 

You're not missing anything. That value just isn't there for you at this time. Doesn't mean that everyone that does use factoring is on a fast track to bankruptcy.

They handle the collections. I run two trucks and drive one of them. It was worth paying someone else to keep up with all that and get the money moved electronically. When we were running dozens of accounts, it was worth it. Simplified my life and enabled just about everything being done from the truck on mobile internet. Now, 3-4 accounts that require no babysitting and the value isn't there any more.

Payroll isn't all that bad once you figure it out. I'm using my bank's payroll service, but did do it by hand the first year. Takes 2 minutes to enter and they do all the tax filings. When doing it myself, it took a few minutes longer and you do have to be a bit more responsible about banking the withholding and paying quarterlies on time.

 

The best benefit of factoring is your paid the next day. My buddy gets a direct deposit next morning into his checking account at 7:05am like clockwork.

 

In my opinion IF the choice is using quick pay from a broker or factoring there isn't that much difference. I have a max rate of 3.5% from my factor. it varies depending on the age of the invoice. My slowest paying broker charges 3% quick pay! some brokers are more and CH Robinson I think is 1%. Direct shippers vary from 7 days to 45 days payments. I also get the benefit of free A/P help, free credit checks, a fuel card program, and I also use their trip pack express program which allows me to keep all my paperwork online.

its a business decision, I could quit factoring tomorrow but for me the benefits outweigh the percentage they charge me. I also keep contemplating adding another truck and that would really make factoring almost a necessity at least in the short run.

Read the factoring agreement carefully and decide if it works for you or not.

 

I work with the factoring department within our bank and I see both sides of companies that use factoring because they are poorly managed and ones that use it simply for the convenience. I can tell you that we love the customers that we never have to talk to and we typically offer them better terms than the clients you have to constantly be keeping an eye on.

I work closely with a few clients who would be out of business if they weren't factoring. These are the ones who are overdrawn nearly every day, up to the point where we have to let them float their checking account from time to time. These are the same companies that handle their paperwork poorly. If we are missing a piece of backup, it can take half a day for them to dig it up. For these types of clients, factoring is a necessity where daily deposits keep them operating. One returned check on their fuel bill could spell disaster.

 

Many variables for Factoring. Recourse or Non-recourse. variable fees. Posting fees. Wire fees. Overnight fees for paperwork. Fees for putting money into your account. Fees for using their fuel card per transaction.
Some Factors require all your receivables
The difference from paying landstar the percentage rates posted above. The Factoring charge is in addition to those percentages.
I'm pretty sure if you register with Landstar and haul a brokered load for Landstar you can get paid in 2 days with no quickpay cost(I can). They put it on a Comdata card for me. Good luck.

 

One more vote for D&S Factors

 

Other user’s posts can only be edited by a moderator.

I would PM Allow Me. to find out why it was edited but my guess it was to remove a phone number or email address. The post came close to advertising with is not allowed in this forum.

 

Oh I understand. Just trying to help people out with a factoring company that does a great job. People were asking and I gave my opinion. No big deal. Thanks