Factoring - a few questions from startup trucking company

Discussion in 'Ask An Owner Operator' started by stevenneill, May 18, 2014.

  1. stevenneill

    stevenneill Medium Load Member

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    As I continue to research to meet my 5 year goalof becoming an O/O, I have recently come across Factoring companies. A few questions:
    1. Do any of you use a factoring company and if so are your experiences positive?
    2. Would you advise for, or against a factoring company and why?
    3.) Can anyone address the pros and cons of factoring and what to look for if choosing this option?
     
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  3. maggard359

    maggard359 Medium Load Member

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    Personally I say no to factoring. Most of the larger brokers have two day pay now. If you take a load with a company with bad credit and you factor that load, when they don't pay the factoring company they charge you back for the money they gave you. If you are just talking about leading to a company as an owner operator factoring shouldn't be part of your business plan.
     
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  4. gokiddogo

    gokiddogo Road Train Member

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    Brokers have quick pay. Use it only as necessary. You should NEVER have to use a factoring company. The goal is to have enough cash in the bank to continue operating to avoid the cashflow problem of NEEDING to be paid immediately ... the faster you can do this the better off you are. Plan for at least $30k cash in the bank if you are going to get your own authority and do it completely on your own. That is after you have your truck, trailer, insurance, authority, all is ready to go, $30k, minimum. For ONE truck. Good luck.
     
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  5. GITRDUN45

    GITRDUN45 Heavy Load Member

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  6. GITRDUN45

    GITRDUN45 Heavy Load Member

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    . Exactly what I saved to start. Well said. Thanks
     
  7. stevenneill

    stevenneill Medium Load Member

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    K. The consensus seems to be pretty consistent so I'll ignore that option. I think I've settled on running Pneumatic Tankers as an owner op. I have two job options for Pneumatic Tanker after December. I think I'll be taking one of them
     
  8. ironpony

    ironpony Road Train Member

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    As well as a separate maintenance reserve. The older the truck, the closer to having enough in the bank for at least an in-frame you should be. A number of years back I read that the most common reason for a new business failure is a lack of sufficient capitalization. Business runs on money, and if you're in trouble credit is something you're not going to get.
     
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