Can Someone Explain Factoring? How Does Factoring Work?

does your friend deal with factoring company only or he has to sign up with the broker he is hauling for like for example load broker is chr. does he need to set up some sort of account first with chr. or he just look at the load board and select which load he wants and request confirmation papers from the broker and send over to the factoring company? i'm trying to sign up with a factoring and want to know if i need to sign up with the broker first or no needed to do so. please reply it will help me a lot. thanks

 

Yes, you need to be setup with the broker first.

 

Thanks Skate-Boad
already sign up membership with truckstop.com and they advice me to sign up with a factors
but do i still need to sign up for all those brokers posting loads on the board or they have one place that i can do signup once and not to warry about it? if you already have a factoring company. thanks again Skate-Boad

 

Factoring is like a payday loan. The people that can't wait for their money pay a fee to get it sooner. A lucrative business for sure.

 

You have to sign up for every broker you want to haul for. You also need to check with the factoring company if the broker has good enough credit or they won't factor the loads. Just stick with the big company's like Landstar and others.

 

Exactly. Why anyone would give up 5% off the top of their hard earned money just to get it a few weeks sooner is beyond me. It is not 5% of your profit it is 5% of your gross revenue.

What are your gross receipts for a year? What is 5% of that? Wouldn't you like to have this amount of money in your pocket? Make some sacrifices and save up enough operating capital so that you don't have to factor and stop feeding the parasites.

 

It's not a few weeks, more like 5 weeks in general. Landstar, Pittsburgh Logistics and all the rest are around 40 days from the day you mail the invoice till the day you get your check and it's cashed and cleared. If your lucky!!! With factoring your money is in your checking account the next day by 7am. I helped two friends get up and running without any money at all. Both made and and doing fine now. One still is factoring.

 

Like I said a few weeks. I would love to be paid in 40 days from when I send the invoice until I get the check. I do a lot of work for oil companies that are 60-90 day pay and that is once they accept and approve your invoice. Most times that takes 2-3 weeks to approve it before the clock starts so the 60 day pay is actually 70-80 days.

 

A few weeks is NOT 40 days! A few is 2

 

Ok whatever.

To me 1 week is 1 week.

A couple weeks is two.

Yes 40 days is 5-6 weeks which is on the high end of a "few" but still.

Let's say a trucker averages 2500 miles a week at $2.00 a mile gross to make the math easy. That is $5,000 a week which is 260k a year. Why would anyone want to give up 5% of that ($13,000 a year ) just so they can get their money the next day instead of in 3-6 weeks? That basically amounts to a $1,083 a month pay cut to the driver.