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

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

  1. ironpony

    ironpony Road Train Member

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    And the cost of money doesn't count for anything? At just a "reasonable" factoring rate of 5% for 30 days, you're paying 60% APR. I believe they call that usury.
     
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  3. KeyFactor

    KeyFactor Light Load Member

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    We're not talking about the same thing. I agree that a simple loan where all you get is money at 5% per month works out to apr of 60%, beyond which you could be in usury territory. Factoring rates are usually less than this AND they include services like AR management, credit analysis of the debtor or even credit insurance, so I think you're making an apples and oranges comparison. I don't know where your number is coming from...it seems high and in this day and age, there are much lower rates available from reputable factors. It is VERY important not just to go for the lowest rate because that's how the guys with lousy service trap you. Ask around and get references...it is a valid service that can help you build and manage your business if used properly. It may not be for everyone, especially those who have no need, no growth or better options.
     
  4. ironpony

    ironpony Road Train Member

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    It's not like you guys have a lock on providing those services. Anyone with a bit of work at the keyboard can find the same thing... without signing up for usury, and the lure of "cheap money," that is anything but cheap.

    AR management? Save it for shop keepers.
     
  5. KeyFactor

    KeyFactor Light Load Member

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    I guess your time is worth nothing then...my mistake.
     
  6. ironpony

    ironpony Road Train Member

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    My time is worth plenty. All you are offering is expensive solutions to small business owners in a low-margin business.
     
  7. KeyFactor

    KeyFactor Light Load Member

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    Let's be clear, I think the rate you are talking about is very high and you can do much better. Most factors offer better rates. You may still find their rates too expensive. I accept that too because, as I said, it's not for everyone...no growth, no need or better options are also good reasons not to do it. I still think there are a few flaws in your argument: the first is that you only focus on cost and not cash flow, the second is that you say your time is worth lots, but you'd rather spend it managing your AR than growing your business (driving or getting more customers). I just have a different philosophy on how you could build value.
     
  8. RedForeman

    RedForeman Momentum Conservationist

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    If the only value you see in factoring is a payday loan, then don't bother. It doesn't fit your needs. Good for you. But why all the hate? You have a bad experience with a factoring company and now think they're all bad?

    I do agree with you in part: anyone considering a factoring company solely on the basis of fast money is going in the wrong direction. And will probably end up signing with one of the companies that operates like a payday loan company and get in trouble.

    Much like changing your tires, doing your PM service, and making your breakfast for that matter, there's a service provider out there willing to do all or part of that for you for a fee. There isn't a thing in this industry you can't do for yourself if you are able, willing, and benefit more by doing it yourself. Ultimately the buyer has to figure out if there's value there.
     
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  9. KeyFactor

    KeyFactor Light Load Member

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    Red, you should change your name to "Yoda", for all the wisdom you share. I enjoy reading your comments.
     
  10. ironpony

    ironpony Road Train Member

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    Please! No one is expressing "hate." This is called reasoned discourse.
     
  11. ibug

    ibug Bobtail Member

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    This company ripped us off BIG TIME! Over $6000 in what they consider termination fee for breaking their contract. THE ABSOLUTE WORST FACTORING COMPANY EVER!!!!!!!!!!!!!!!! They are actually out of SC. We are a small trucking company out of SC and had already been working with Freight Capital that treated us well. This company started calling the owner and blowing up his phone offering great LOCAL services and good rates. (Which should have been a red flag because they were calling to get business.) After we switched we could not get a hold of them by phone or my email, worst customer service, sending payments late and charging us way more than promised. In the beggining they stated that they were flexible and we would be able to break the contract with out any problems if we chose to. But when we did try to break the contract we were told that the termination fee could be up to $16500. They ended up sending out notices to all my customers stating that all our invoices go directly to them and we had checks sent to them in which they had no bols or invoices for. In which they kept and used towards the termination fee.

    I spoke with another company in which they stole $25000.00 from also. THEY LEGALLY STEAL and their is no juristiction over factoring companies. So I am in the process of hiring an attorney and trying to get my money back! Any one else have any problems with them please let me know, any infor is helpful.
     
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