Factoring Companies That You Recommend For Owner Operators?

Yeah @Accidental Trucker are you even an owner operator?

 

If factoring and quick pay went away then the industry would have an easier time keeping the load to truck ratio in check which would help rates in the long run for everyone.

 

Like a pay day loan.

 

That's the analogy I use to explain it to non-industry friends.

 

Yeah so apparently if a person adds all of those extra costs into their rate quote all of a sudden it's ok for quick pay, factoring ect.. I don't get that logic either. Still giving money away.

And good luck adding a bunch of extra charges onto a flat rate spot quote because the next thing you know you're sitting there with nothing to do.

 

Smart carriers do not use quick pay. Why, they are not broke. They have already maxed out the most they can out of that load to be able to get it. Leaving as little as possible on the table. Quick pay is just the broker “holding gross.”

 

You and your friend suffer from a reading comprehension issue. I never said anything about rolling FACTORING fees into the rate. QUICK PAY fees were routinely added to the rate to cover my ### if the broker was new (to me or as a new start up) or I didn't like their credit. Of they didn't pay during the QP terms I could file on their bond faster. A little extra insurance for me if you will.

 

That's one way of looking at it and many times you're right but I see it as a very cheap hedge bet in my favor. If they have shakey credit or a new brokerage I can haul with more ammo on my side to get paid. QP at 2-5 percent is nothing when you add it to the rate. Most brokers with low credit or are new have no problem doing it.

 

Most successful small businesses don’t factor.
Want to know the main reason people factor, because they don’t have enough money reserves to survive 30-60 days waiting on getting paid. That being the case, factoring in and of itself isn’t that bad, it’s the fact that they are running on a shoestring and need factoring to stay afloat. Running like this will sooner or later catch up with you.
Another issue is there are a bunch of O/Os with a company driver mentality. Business runs on a 30-60 day pay cycle, want to get get paid every week maybe you should go back to W2 work.

 

Factoring is all about time, thus why interest rate is applicable. You pay a significant premium at the end of the year for the quick pay.

Say they float you $200k in total invoices over the course of the year, that only required them to loan you a total of $24k at any given time.

They are effectively earning 16% return on their investment. Minus expenses of course, depending on how much you pay the desk drivers in your factoring company its still a great investment.

The risk is low for that kind of return, if a broker or customer doesn't pay you just back charge the invoice to the carrier.