Factoring vs Loadboard Quick Pay

p608,

Thank you!

No argument from me there. In fact, that is EXACTLY what I'd call it, and worse!

The equivalent APR on interest rates is easily calculated by multiplying the fee % by 12 as follows (assuming standard pay is 30 days)

1% fee = 12% APR.
2% fee = 24% APR.
3% fee = 36% APR

This goes for both factoring as well as quickpay. And, in fact, if you wanted to get REAL technical about it, factoring might be calculated slightly higher since, very few brokers offer same or 1 day turn around on the pay...so, if you got down and dirty with the numbers, you might be shocked at what quickpay is really costing.

However, one good thing you can say in favor of quickpay is, it never gets worse than advertised, and, if I need to use it for some reason, I always negotiate the load rate up to at least cover the amount it costs me to use it.

A lot of factoring services charge more than 3%...and, your fee may go as high as 15% or 20% when there is a problem. THAT is why I say it goes beyond "predatory" lending, it gets into rates you'd pay the guy down on the corner with the crooked nose!

These fees are hidden inside the factoring company's contract, which will be dozens of pages long. Some factoring companies will not reveal their rates unless you sign a "disclosure" agreement, which, if you look at closely, is actually an agreement for services! This happened to me over 5 years ago.

If you give notice to cancel, they still have their hooks in you for at least that period of time, if not more, because, it is up to them to ALLOW you to be released from their UCC filing and, it is up to you to contact each broker you factored with to show them the release!

THAT should scare anyone considering factoring enough to look closely before you leap. If you can't figure it out, pay your lawyer to read the contract and tell you in layman's terms what you are in for.

Perhaps payday loans are run the same.

Again, IF you have to give up something to get your money faster, quickpay services is the way to go.

Ideally, you have the capital to float 30 days of receivables or good enough credit to simply have a line of credit at your bank with a much lower APR.

 

factoring is better if you are a fleet with and driver slike to see they check in 15 days , they pay a percentage so you can pay the driver and in 30 days they pay you the rest once the boker pays , but again , but they can take long to send payment or place it in their system,you dont get tot see that , after all the longer it takes the higher percentage they take off from the load

 

I hear what you are saying, cash flow is KING in this business, especially when you have multiple drivers. You multiply the demands of it with each additional truck. Fuel, tolls, repairs, payroll.

But, for anyone considering using it, there is a HUGE downside risk when dealing with blood-thirsty factoring companies that you don't have to worry about when you work with brokers who offer a quickpay option and/or have a line of credit set up at your bank.

 

i work with apex , they charge me 3% after 30 days , i do always check brokers with low quick pay otions , there was a load i did an invoice for the wrong broker , they were suppose to fix it but they did not , ,after 30 days , broker did not received invoice now i have to wait another 30 days fml , the downside is you can't see how long the y really take for payment

 

Hard to follow what you just said....are you referring to factoring when you say its hard to follow how long payments take?

I can believe that, because, you are now "out of the loop" on what would otherwise be your receivables. You need to really pay attention to them, get a report from your factoring company on which ones pay and which ones don't.

Depending on WHO you use for factoring, I have heard some real horror stories of people getting caught up in that BS...factoring all their loads, along comes ONE that gets misbilled or otherwise goes past 30/60/90 days, whatever the term limits are, next thing they know, their 2% or 3% rate gets jacked all the way up to 15%, 20% or I have heard some who go up to 25%! You go broke giving up that much, and, it is buried deep in some contract somewhere, and typically, you can't get out easily, and now, will have a tough time getting a decent rate elsewhere.

Keep in mind, for every 1% point of factoring rate you pay, it is like 12% annual percentage rate on a line of credit. So, if they take you to 20% rate for factoring, that is like paying a 240% interest rate on a loan per year. That means, for every dollar you earn, you are paying $2.40 in interest when compounded annually!

Hence why I say, be VERY careful dealing with factoring companies, and, try to avoid it as much as possible.

I am not real familiar with Apex, but, there is one called Triangle or something like that DAT promotes using. Supposedly, they allow you to pick and choose your factored receivables. I'd only use factoring until I was able to work out something with my local bank to help cash-flow my receivables.

 

Hard to follow what you just said....are you referring to factoring when you say its hard to follow how long payments take?

yes sometimes a broker say the sent out the payment but the factoring place it on the system a couple of days later , i can be able to see the check and date but i'm sure they are shady about it , after all the longer it takes the higher % they make

 

Ha ha!!! YES!!!

This is why conversations in this manner can be tough!

You hit it on the head. Good that your factoring co lets you see how payments are going.

 

I know this is an old post, but this comment(paragraph) has helped in making my decision easier on choosing which payment method would work for me at the moment. Thanks

 

I’ve been using Triumph Capital. When I wasn’t factoring, I was using Tailwind for everything. Payroll, Invoices, Dispatch, it even has brokerage features, if you need those. It’s not expensive and cloud based. I still use to do the payroll.

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