Factoring Companies

I'm another person that still can't come up with the 60% interest theory - nothing is at 60%, and this comes up all the time.

5% is 5% - or they'd have to legally call it 60%. If you turn in a payable of $1,000, they pay out $950 after fees. If 5% crushes your profit, you're just running way too cheap! Anytime I have fees (I get 89% of my load revenue), those are figured to the per mile rate. Although they always try to tell me - it's $x.xx/mi - I work in what they're taking and figure the actual mileage before I take their word for it. If the rate is too low to pay their fees and profit, I just don't take the load in the first place.

 

I am actually a fan of CH Robonson...They only charge 1.5% for quick pay and if you know where and when (end of month, Fridays) to book loads with them you can get a decent rate. Right now trucks are in demand...I rarely take a load without telling them "I'll check with my driver" and waiting at least 30 minutes to call them back- (though they usually end up calling me back before then with a better rate) I always post my trucks on their board and they call me all the time...Sometimes I get $250-$300 for a 15 mile local run.
As far as factoring companies go, I ALWAYS find out how much and if the broker/shipper charges for quick pay...It is important to do this AFTER they have spent invested a lot of time telling you all the details about the load, they I ask "what was the the rate again?" and depending on how much tey charge for quick pay and wether or not you need to factor ask for an extra $50 over what the going rate is to cover the fees.

 

If you can squeeze an extra 5% on a load than why not just keep the money instead of using it on factoring or quick pay? 5% won't cut much in my profit,but over time it can add to a lot more than what you would pay on a credit line if you pay it in full when it is due. In another words,when you factor you are wasting your money.

 

I offer that factors will provide value beyond just the money being provided to the carrier. A non-recourse factor assumes the credit risk of an account. They check the credit worthiness of the load for the carrier. They mail the invoice. They post the invoice to a ledger. They make collection calls, and then post the cash receipt. In essence, they become the accounts receivable department for the carrier so they can focus on the front end of their business. It is acknowledged that the cost is always a concern for the carrier, especially if the margin on the load is thin. However, if a non-recourse factor will approve a broker credit for the carrier that pays a higher rate compared to other posted loads, the profit may be greater even after the factoring discount. I have seen so many carriers grow their fleet and profit for many years by having a factoring company provide them this back room support. In closing, whether you choose to factor or not, make sure you are moving freight for a credit worthy broker, because not getting paid is the worst of all options.

 

Because some of us have a hard time floating 10 grand worth of fuel for the month hoping to get paid out. You could go ahead and count another $50 a day for tolls and scale slips, and all the other expenses that push bills to about $3,500 a month with the truck parked in my driveway. Are you a dense trucker, or a company driver with odd questions? That, and trying to get the billing sent from a truck while we're out on the road is a trick in itself.

 

Hate to tell you this,but if you can't float 10k worth of fuel in a month than you are slowly on your way out of business.Dense?? Hardly. Since when do scales and tolls cost 50.00 a day? That is trucker math. My total cost for scales and tolls were 700.00 a year on average or less. Based on some of your replies it is apparent that either you have crappy credit or no cash flow or both.Otherwise no one with good credit would waste their money on a factor.

 

Depends on the business you're in I suppose. I pull a hopper, and can easily go through $50 a day in tolls and scales on average (weigh and reweigh $10 - one load). Half the trip across the Penn Turnpike will run you $60.55, and I know that because I run it at least once a week. I have regular trips that cost me upwards of $100 in tolls in a day.

Can't float $10k a month for fuel - on my way out - HAH! C'mon now. If you never drive the North East, I suppose tolls would be completely different. And if you pull a spread or nearly any kind of van - scaling is alot easier. About half of my loads have to be scaled before and after unloading at a certified scale. Credit is tight, thanks to the lending crunch and what's happened in trucking. Heck, half the time someone knows what business I'm in, I'm lucky they'll take a check from me. Cash flows just fine, in and back out again but honestly - didn't mean dense as an insult - just an observation. Do you do your A/P and A/R from your sleeper?

 

I take offense to the statement that if you can't float 10K you are on your way out of business. In this economy if you can pay your mortgage and sock away enough for renewal fees and serious repairs, I think you are doing fine.
When the bottom of the recruiting industry fell out and my husband lost his dump truck driving job. I used my $ and bought my husband a job and me a tax write off.
Frankly if we had not gone into the trucking business, I am not sure how we would have made ends meet. Sure it is risky and expensive and stressfull and unpredictable, but it has been a steady income for us and we made it through the past 2 years which have put a lot of other folks out of business.
All of our bills our current, sure we have some debt, but if we decide to get out of the biz we can sell our truck (which we own free and clear) pay off our debts and move on.
While it is good to have a large cushion, not everyone is that fortunate. We had to learn to move smarter, get in with good mechanics (luckily my husband is latin), find someone who can get us good non-retread tires for $100 a pop, learn how to save $ doing our own fuel taxes and negotiate factoring fees into our loads.
Even if we could afford to not use quick pay options or factoring companies, I still would. I like getting our $ FAST and not having to wait for the mail or chase our money.

 

This reads just like a sales pitch and seeing as you listed "trucking
industry" in your information I would make a guess that you either
A) own a factoring company, or B) work for one.

 

guess you've never been in the ny,nj,pa area you can easily spend $150 a day in tolls