Factoring - What's normal and is it worth it?

What are your thoughts on building a savings nest egg so that you don’t have to factor?

 

Until the last year I thought factoring was unnecessary. When I had satellite radio I listened to Kevin Rutherford explain why it makes sense, especially for the solo O/O. I believe you only want to consider using the service's non-recourse payments. Meaning, if your paperwork meets the factoring company requirements you get paid and that payment cannot be reversed. Some brokers are expert at never paying bills. And rather than raludly become an expert in collections, let the factoring company do it. Use one of the big factoring companies.

 

Before you move freight for the new broker you can call the factoring company and ask if they are familiar with the broker and if anything else is required to get paid on the load. The factoring company is the expert on which brokers pay and which ones dont because they deal with hundreds of brokers per day. Factoring companies already have the experienced Accounts Receivable department and people that spend all day chasing down slow-pay or no-pay brokers.

Do you have someone in an office that can spend 6 hours on the phone trying to get payment? If you are a one-man band I would factor for a few months and then once you have lanes and regular trips experiment with direct pay.

 

What do you think of hiring a finance company to finance the delivery of your paycheck as a truck driver ?

 

I know that we need to run the customer through the factor's credit approval to get that.
Old 'family' warehouse customers that don't make the grade are handled in house.
Chronic late payers that were factored can be deducted by the factor if it goes past their time limit which makes us folow up and fix invoice problems quickly so they pay 'em too.

 

What % do you pay your financial advisor?

 

If you do get a financial advisor make sure it is explicitly a fiduciary relationship that they are fee only.

Fiduciary because that’s the highest level of loyalty to the customer where they put your needs ahead of their own.

Fee only because then they derive all their income from you, their customer, and none from companies paying them commissions to sell certain securities.