Factoring

Discussion in 'Ask An Owner Operator' started by Joey571, May 19, 2022.

  1. Joey571

    Joey571 Bobtail Member

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    Can you factoring company send NOA and not factor an invoice. Where can I get legal advice to get released?
     
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  3. blairandgretchen

    blairandgretchen Road Train Member

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    NOOA ? As in weather radio?

    Please explain.
     
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  4. Tug Toy

    Tug Toy Road Train Member

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    Best way to get them to stop is by not starting in the first place.


    In my opinion…


    If I had to factor invoices I’d consider my business a failure. Trucking or any other business.
     
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  5. RedForeman

    RedForeman Momentum Conservationist

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    Yes. You're leaving out important details.

    For example, if you did not run a credit check on a new customer, and the factoring company found them not to be creditworthy. In that case, they'll invoice it and you'll have to wait until it's paid. They'll either pay you upon receipt, or carry it in your reserve balance until that pays out whenever that is.

    Or, if you have an outstanding claim. There is usually an offset in the terms and conditions. That means if you have one load go into a claim status, they may withhold funding on additional invoices to offset a possible claim. If that is the case, it's on you to resolve that claim asap.

    If you can read, you don't need advice. Just read your contract. Generally there's a notification period, and probably some fees involved. You're a little late understanding what you signed up for, but you best get it clear in your head before you do anything even more stupid and perilous with your business.
     
  6. Joey571

    Joey571 Bobtail Member

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    This company has 7 million in credit on their website. An NOA is a letter saying you have a factoring company so do not directly pay the carrier. The problem is the factoring company won't pay either. You can't reach anyone at TAFS. When you call you have a recording and have to wait for them to call back if they call back. As for the one that said if you have to factor then you wouldn't start the business I am glad you can start with lots of capital but we aren't rich. We have to buy fuel and it took a good chunk getting our own authority. We just think we should get paid for the job we do.
     
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  7. ProfessionalNoticer

    ProfessionalNoticer Road Train Member

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  8. RedForeman

    RedForeman Momentum Conservationist

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    You still aren't telling the whole story. Something happened to trigger them to withhold funding that invoice.

    It's important you understand I'm not trying to make you out as a bad guy, but get to why this has happened to direct you to a more productive solution.

    Hiring lawyers is a sure way to make this go really bad, possibly wipe out your business even if you are totally right about everything. Why is that? Because they got nothing but time and money, which you no doubt have less of. Soon as you mention "lawyer," any chance of working it out easier or faster goes right out the window. If you've already done that, you can probably just stop reading here and prepare for a truck sale. If you're ready to embrace the suck and solve the problem, then read on.

    Factoring companies, even the crappy ones, don't just randomly withhold payments. You got some kind of notice. Either a refusal on this invoice, or an offset notice. Either this broker was a no-go with TAFS before you sent it in, or you have an outstanding invoice that's either gone uncollected too long or a claim pending on another invoice you already were funded on (could be with any broker) and they're doing an offset.

    It's also possible you had just gone into "default status" when you sent this one in, without knowing it. By now you should have gotten some kind of notice of that. Find your contract and read the section on "default" carefully. There will be a list of things that will cause default on your part, along with the penalty that comes with it. Penalties may or may not include: an immediate increase in reserve requirements, less favorable fee table, reduction in funding available to you, different/slower funding timetable. In the most egregious violations, they may shut down your funding altogether. Which would hobble your entire business, depending on the type of assignments and how many.

    Lots of ways this can happen. The most common way that happens is depositing a factored invoice check that is incorrectly mailed directly to you by the customer. Taking too long to turn in paper bills when demanded can be another one. Without reading your actual contract, I cannot make a complete list.

    Perhaps more important is this: going into default status is the moment when that awesome factoring company you've worked with possibly for years, suddenly turns into a massive problem and impossible to deal and communicate with. To solve this, we need to know why that happened and get to fixing it.

    The broker (customer) credit rating on D&B or other reporting bureaus is only remotely relevant to this discussion. D&B and the like evaluate a firm using all their accounts payable, not just shipping payments. They may be paying their suppliers, utilities, and capital loans like clockwork and at the same time total deadbeats to their motor carriers or their factoring companies. The credit score tells you none of that.

    Every factoring company maintains their own internal approval process, and has it as a mandatory step in their terms and conditions. Usually a link on their website that you enter an MC or name, and it returns a yes/no answer. If you don't use it, you submit your invoices at your own risk. If it's a no, they won't advance it period. The best you'll get in that case, they will invoice and pass through 100% once it pays out, same as if you'd mailed the invoice yourself.

    What's relevant here is: factoring companies will sometimes refuse to advance invoices for brokers that may have a good rating on D&B, but are just awful to deal with or hard to collect from. Often by using a credit report tailored for factoring companies, that contains only experience from other factoring companies. Examples: claim happy, routinely short pay, or slow walk invoices only when they come from a factoring company.

    There's still other things about a customer than their credit score that weigh in on a decision. That broker may have begun to trend negative on credit or an increase in bond claims, making them a risk for bankruptcy. Even apparently strong firms have this happen. A few years ago TQL suffered this fate for a couple months. I forget the exact circumstance. Maybe they had a large credit line pulled, or one of their shippers put a huge bond claim on them, I just don't remember. It was a 7 or 8 digit size problem that they rectified reasonably fast but the consequences persisted a while. Point being: there's a lot of negatives I can bring up about TQL, but they always paid on time when your paperwork was correct, and this still happened to them.
     
  9. REO6205

    REO6205 Trucker Forum STAFF Staff Member

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    This post should be required reading for any prospective O/O.
     
  10. PSM379

    PSM379 Medium Load Member

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    Didn’t start with much, never factored and never put fuel or tolls on credit. I will never understand factoring.
     
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  11. ProfessionalNoticer

    ProfessionalNoticer Road Train Member

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    Can't you make it a sticky or something?
     
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