Factoring companies: which are good? What to look out for?

Discussion in 'Ask An Owner Operator' started by last load, Apr 10, 2013.

  1. G/MAN

    G/MAN Road Train Member

    7,031
    8,621
    Sep 3, 2010
    0
    You do need to do your homework when it comes to finding the RIGHT factor. I don't have a problem using a factor, although I have not used one in a while. Ask lots of questions. It is important to pay close attention to the fine print. Make sure you read and completely understand the contract before you sign. It is sometimes better to just walk away from a bad deal. I don't sign contracts that are not in my best interests. Dealing with a factor is no different than any other business relationship.
     
  2. Truckers Report Jobs

    Trucking Jobs in 30 seconds

    Every month 400 people find a job with the help of TruckersReport.

  3. Joe73

    Joe73 Bobtail Member

    3
    1
    Apr 25, 2013
    0
    I can tell you not to use foleys carrier services (bird dog) they will totally rip you off
     
    silver dollar Thanks this.
  4. silver dollar

    silver dollar Medium Load Member

    481
    210
    Jan 31, 2009
    Central North Carolina
    0
    AMEN. You are right. They would hold most invoices for nearly 3 weeks before submitting to customer. Then after 60 days would do a charge back to me taking the money from my bank account. Then when the customer paid, they would not credit the money to my account until I called; then they took another 5% factoring fee. In essance, taking 10%. I spent a lot time tracking my money down, and this is what I was paying them to do. They still owe me $700 on the last invoice I factored with them. Red Classic sent me a copy of the canceled check where they had paid the invoice, but Foley claimed they never recieved payment.

    I factor with Match Factors Inc now, for over 2 1/2 years, and not one single problem yet. And not one charge back.
     
  5. Truckerdude007

    Truckerdude007 Bobtail Member

    10
    2
    Mar 2, 2013
    North America
    0
    Financial carrier services out of noth carolina stay awayyyyyyyyyyyyyyyy the worst factoring ever im telling yall this they are all sharks and motherffff
     
    silver dollar Thanks this.
  6. G/MAN

    G/MAN Road Train Member

    7,031
    8,621
    Sep 3, 2010
    0
    If you don't want to use a factor you could only do business with brokers who offer quick pay. In other words, they will pay within 24-48 hours for a discount on the rate. Some offer a discount of 1 1/2-2%. More brokers are offering a quick pay option. One thing that we seem to forget in this industry is that we should be the ones setting the terms for those with whom we do business. If customers (brokers or shippers) don't want to comply with our terms of doing business, then move on. Find customers who will agree to meet your terms. I have never been involved in any other industry where the customers dictate the price that is charged by vendors (trucking companies) and the terms ( COD, prepaid, net 30, etc.,).
     
    Davidlee Thanks this.
  7. ironpony

    ironpony Road Train Member

    17,502
    12,015
    Sep 23, 2007
    Ask my GPS...
    0
    It would be cheaper to finance it on your credit card. 5% charged by a factor for 30 days is 60% APR.
     
  8. KeyFactor

    KeyFactor Light Load Member

    70
    18
    May 8, 2011
    Montreal, Quebec
    0
    I'm not sure I agree with that logic, although many think that way. Factors provide more than just money....they manage your AR and provide credit information on companies to help carriers avoid doing business with companies that don't pay. If you manage your own AR, you should ask yourself how much time you spend doing this each month and does it make sense to "outsource" this function to a factoring company so you can spend more time on the road making money. If you have an employee managing your AR, how much are you paying them?

    I know many people like the 5% flat-rate approach. I think it works for customers that take more than 60 days to pay, but if your customers pay quicker, there are cheaper pricing structures out there.
     
  9. SamTheMan

    SamTheMan Light Load Member

    155
    69
    Jun 20, 2013
    0
    It is silly to give away 5% of the load profit.

     
  10. G/MAN

    G/MAN Road Train Member

    7,031
    8,621
    Sep 3, 2010
    0
    There are advantages to using the "right" factor. It can help your cash flow without incurring debt. One reason that I used a factor at one time was to track payment history. Not all factors charge 5%. Some charge more and others charge less. If the factor is recourse, rates can be less. Some of the world's largest corporations use factors to improve cash flow. I would prefer to not use a factor for the long term. It is always better to run on your own money when possible. Using brokers who offer quick pay is often a better option than using a factor since the rate is usually much lower than a factor may charge. Another option is to establish a commercial line of credit with your bank. There is usually an annual fee for the line of credit and you are only charged interest on the money used. The rate for a line of credit would be less than either using quick pay or a factor. Most banks want to see financials and at least 2 years of history. Using hard assets to secure the line of credit may also be an option. Hard assets would be something like real estate.
     
    KeyFactor Thanks this.
  11. KeyFactor

    KeyFactor Light Load Member

    70
    18
    May 8, 2011
    Montreal, Quebec
    0
    Many entrepreneurs don't understand that the cash flow benefit of factoring FAR outweighs its cost - especially if you consider the time you get back by outsourcing your AR. This is time that should be spent driving your truck or generating sales because those activities build much more value than managing your own AR. It is cash flow and not profitability that leads to insolvency. If your accountant doesn't agree with this, you need a new accountant!
     
    silver dollar Thanks this.
  • Truckers Report Jobs

    Trucking Jobs in 30 seconds

    Every month 400 people find a job with the help of TruckersReport.