good Non-recourse factoring

5% crazy high
I use factoring company, and I called multiple companies to get a quote, the highest was 4%
Make sure to let them know that other company give you better %
FleetOne and RTS are good companies, but be prepare to wait 45 min on hold if you calling to customer cervice
Fleet one charges me 2% now and I will push that to 1.50% in one month

 

That is a "Non Recourse" factor charge. Seems pretty low rate for that.

 

You are right, sorry forgot to mention that, BUT if you read FULL contract Carefully than you will see that this "Non recourse" factoring don't really cover anything.

 

Sorry to jump into this thread months after the fact, but, I have a comment, a question and a bit of advice from experience.

Before I get too deep into this post, I am curious to know, the question was asked but I didn't see a reply...has anyone had experience using Triumph for factoring? Good or bad??? You see them all over now, they are in "partnership" with DAT...you will see certain loads posted on DAT that are "approved" with Triumph for factoring. But, they will not factor those not approved. My guess, they either know something about that broker, the broker is too new (or small) or, the broker wasn't willing to "play ball" with Triumph. Perhaps there is some discounting going on both ends for "Triumph approved" loads? I don't know that for a fact, just a hunch.

Here is my commentary on the 7 pages of posts...The argument about using a bank LOC vs a Factoring Co is a good one for people to ponder, but, it's like comparing apples to oranges.

Let's hope you never need to use a factoring company...BUT...if you do, using the RIGHT factoring company is way better than most "quick pay" options that some brokers are more than willing to give.

That isn't to say all QP is bad, for example, Landstar's brokerage side offers a pretty decent quickpay, low % and paid within 2-3 days of receipt of paperwork. CH Robinson is pretty good too. There are others I have used in the past that are decent for QP, like Coyote, Mode, CRST, TMC, and XPO, but, there are some that charge 4-10% for QP service and, you might not get your money for 7-14 days.

I love (not) the ones that OFFER the quick pay, but, then you have to watch them like a hawk to make sure you get your money on-time, and, when you don't, fight to get the fees waived when they grossly miss the published target. You'll notice, those guilty make it extremely difficult to talk to anyone in their accounting dept. Yes, Landstar and CHR might not have the best paying freight depending on where you are at, BUT, after 5+ years of operations, taking loads from them, I NEVER had a Landstar or CHR load not get paid exactly when they said it would be.

It only makes sense that, if you have EXCELLENT credit score and a clean history of using it, you'd go to your cheapest form of money, which will ALWAYS be a bank. It doesn't matter if you are buying a car, a house or just wanting to have a LOC...banks will ALWAYS represent the cheapest loans. But, not everyone HAS that great score of credit history. Banks are also making it tougher to get a LOC...so...factoring companies are just another source for lending when you can't qualify for loans at a bank. You could also borrow money on your credit cards. There are different "rungs" among the financial food chain "ladder", banking is on the top, factoring is probably the bottom. I suppose the true bottom rung is borrowing from the guy with the crooked nose!

The one NICE part of the factoring company is, an O/O can qualify for it pretty easily. And, as you move down (or is it up) the ladder, improve your credit and history, you can choose other options cheaper than factoring.

As I said before, Triumph is a company name that keeps popping up lately for factoring. A few people have mentioned it here, but, nobody has said positive or negative about using them. They are in bed with DAT and, when you look for loads on DAT, if they have a check mark next to them, it means that Triumph will factor that load. I have talked to a Triumph rep and, what they have to offer SOUNDS good, but haven't reviewed their contract. It is a decent %, no long-term commitments, and, supposedly, you can pick and choose what loads to factor.

I will be returning to trucking after taking some time off to recoup from knee problems which ultimately required surgery (and more PT) to fix. I have drained most of my business bank accounts, and, before I dig into my personal savings, I'd rather pay 48% APR and write it off. I don't envision I will be factoring for long, a few months to start and probably dwindle it down to nothing within 6 mos. I don't have a high enough credit rating to qualify for any bank loan programs and I operate as a sole proprietor.

Word to the wise:

1.) Incorporate. It takes 2 years min after starting a new bizz before banks will even consider extending business credit. By not incorporating right away, every day that goes by is another day your not gaining ground on that 2 year window to borrow without giving personal guarantees and having your personal credit score/history come into play.

2.) Use credit to your advantage. For years, I borrowed money to buy houses, cars, had a LOC, credit cards and a mountain of debt. I was taught (old school) that "cash was king" and borrowing money/paying interest was BAD...I eventually got to a point that I paid off all my loans and paid cash for everything.

Fast forward years later.

While that SOUNDS great, it was a HUGE mistake. Enough time goes by that you paid off your last bill, haven't borrowed anything since, your credit score will take a dive. Then, you will be unable to qualify for bank financing and have to take all the baby steps to rebuild your credit, like paying for "secure cards" (giving someone $500 so you can borrow back $400), working your way up to borrowing at excessive interest rates, like I am doing right now, trying to "build up" the score and get a history of paying it back.

So, keep SOMETHING mortgaged, a car leased or auto loan, use credit cards and pay them back.

Ideally, having a big cash reserve in your business account is best. For those who don't, I like the idea of having a business LOC with your bank. Use it to pay your insurance bill up front for the year, buy fuel (at cash prices), pay for tolls and other items you pay for up front. But, the best reason to have it is for an "emergency fund" to pay for the unexpected while you are OTR. As a small-time O/O, last thing you want is to be stuck someplace, paying to live at a hotel and wondering how you will come up with the cash for a major repair that has you sidelined for days.

 

Figures dont lie. But liars sure figure!

 

I used apex back in 2008 when I first got started. I thought they were a pretty good company. I'd like to make a few points about factoring, not because I advocate for it, but because there is a lot of misinformation about it. These are my opinions and experience only.


1) My setup with them was Recourse, so if any broker failed to pay after 60 days (iirc) it would be charged back to me. However, I could check the broker's credit with apex before hauling the load and if they didn't check out then I didn't take the load. In the 18 months I used apex I did not get screwed on one single load. I got paid on all of them...tho there was one that was looking stinky for awhile, it finally paid. And this was during some dark times in the trucking industry.


2) My rate plan back then was a sliding scale depending on how long the broker took to pay. It started at just 0.5% for a broker who pays within 5 days (yeah, if you knew he was gonna pay that fast, why factor? Thing is, you usually don't know). For each additional 5 days they took to pay the rate went up another 0.5%. At 30 days the factor charged 3%, at 45 days 4% and that was the top rate. Over 60 and they charged it back, but like I said, if you did your homework before booking the load you could almost completely eliminate this possibility.


Again, I'm doing this all from memory so I could be slightly off with some of the facts and figures. But as I recall my avg rate was slightly over 3% at the end of the year, including postage and direct deposit charges (yes, these are additional charges that you have to pay).


3) One thing that offset a lot of my factoring expense, though, was their fuel card. It had excellent discounts, something like $0.25-0.30 per gallon. The last calendar year I used them I remember adding it all up (because they give you detailed fuel reports) and discovered I had recouped 1/3 of my factoring expenses in fuel savings, which effectively lowered my factor rate to about 2%.


Now, before someone brings this up, Yes, you don't have to factor your invoices to get a fuel card to save on fuel. But I highly doubt you'll get one as good if you're a mom and pop operator. My bro-in-law, who did not factor, was only getting $.10/gallon with his card at the time. Big difference in buying power if you're part of a large group.


4) I didn't have to spend ONE #### MINUTE on the phone chasing down brokers and playing the collection game. If you like doing this, or don't mind it, then more power to you. Seriously, good for you. But I had an entire company staffed with professional, experienced collectors working on my behalf so I didn't have to do it.


What is it worth to have a large company do this for you? A company large enough that brokers can’t blow them off? And the reason they can blow you off and not a large factoring company, who works with hundreds or even thousands of small trucking companies, is because of the credit rating system. They don’t want to screw up their rating with a big company because it will make it harder and/or more expensive to cover loads in the future. But they will screw Mom n Pop over in a second. I had a buddy who didn’t factor, and didn’t bother to check credit on some of his loads. One of them screwed him for $1500. Just flat out refused to pay. If he was factoring he would’ve known not to take it because the broker had a terrible rating. So what he saved by not factoring his bills for the year, he gave back half of his savings right there.


Only you can determine if this has value to you, and how much. But it definitely has value to me. Because,


5) In the last 30 years I’ve spent all but about 5 of it being self-employed. I’ve never gotten rich but I’ve never gone bust, either. The two most important lessons I’ve learned from it:

A) Cash flow is King. I don’t entirely buy the comparison of factoring to borrowing money. Back in the 90’s I had a retail business. If you had stock sitting on the shelves too long, then by gawd you marked it down, and kept doing so until it sold. Because there is no profit in any item until it actually sells. Until then you just have a sunk cost. So get what you can for it and put that money into something else. I see factoring a little bit like that; you’re not exactly borrowing money from a factor, you’re selling them an asset at a slight discount in order to move on.

B) Just because you own a business does not mean that you are suddenly good at everything, despite what you may think. Figure out what you’re best at, or enjoy doing, maximize your time in those areas, and hire somebody to do those things you suck at or don’t enjoy, because if you don’t like doing it you’re going to halfass it. And that will eventually cost you money, often more than just hiring someone to take care of it would’ve.


6) Last point: I’m emphatically NOT endorsing the notion that everyone should factor. In fact, I will say that anyone who does factor should have a concrete plan for weaning themselves off the practice. But America runs on small businesses, and I’d bet that an overwhelming % of those small businesses still running today would never have gotten off the ground without some kind of financial leverage.

 

Mule Team, I truncated what you said to save room here...excellent post, well thought out. You made some great points! Thank you!!!

I have been operating with my own authority since 2012...prior to that, I ran intrastate since 1995, so, didn't need authority.

I have historically stayed away from factoring companies. When I was still doing intrastate trucking, even though I was always the LAST guy getting paid, I was dealing with a known entity. I could drive over to their office and ask "where is my money"....and, they knew I would! They didn't want me in their face.

When I got my MC, I quickly realized, I can't reach through the phone to throttle someone's neck. Yelling and threatening someone only gets you hung up on and labeled as a "bad" player. I'll admit, my temper has gotten me black listed from some carriers. I don't really care. I quickly learned how to get along with people and I am still in business. Not sure if they all are.

So, pretty soon after getting my MC, I thought I should set up an account with a factoring company. I don't know if I just chose the wrong one, or if things have changed. Honestly, I don't recall who the company was, I was referred to them by the people who helped set up my authority. First red flag I should have paid attention to was that they wouldn't tell me ANYTHING about their offerings unless I filled out an "application". They claimed that was how everyone worked. I came to find out that what they called their "application" was actually a contract. When I decided to not move forward with them, they threatened that they had a UCC filing on my company and would lay claim to ALL my receivables. I got my lawyer to write them a letter and they later rescinded the threat. But, what a nightmare, and, a lesson learned, read thoroughly before signing anything and as well, do your own research on someone BEFORE talking to them.

I have to agree with you, the suckiest part of owning your own business is when it comes to collecting what is owed. It only takes a few bad apples.

Everyone is your friend, everyone adores you BEFORE the load is delivered, but after? It is like "Who is that?" They will ignore you. Your problems are not their concern.

I can't tell you how many times I opted for "quick pay" services to be made within X number of days only to have that scale out to days if not weeks past due...AND...while many refunded it, a few of the companies had the gall to keep their fee! You learn who you will and WON'T work with.

Paying a few percent of every load for someone who is backing your receivable and collecting it for you, that is worth its weight sometimes! Your right, they will screw with the little guys all day long, but, when it comes to the big players...no. That is probably why this outfit Triumph has it's list of approved brokers. They know who they can get their money from.

Being your own collection agent is hard. If you are working and calling, your patience on the phone get's pushed, talking to someone when you are trying to focus on your driving, in an area you are not familiar with, looking for an address, or just in general trying to navigate an 18 wheeler around in traffic. The LAST thing you want is a sea of vomitous BS coming coming through the phone. I for one have never been very good at holding my patience with people. I do take Beta Blockers now, and, that does seem to help me stay a lot more even-keel about things!

Life isn't so much how you act, it's how you react. I try to not get my undies in a bunch over money...I don't let people take advantage of me either. Now, if I have to talk to someone who owes me money, I try to put them in my shoes. I usually say "You know, this is my paycheck you have...without it, I can't operate and pay my bills...I took this load in good faith that you'd pay as promised, I did my work, I bought the fuel, I paid the tolls, I put the wear and tear on my vehicle, now it is time to pay me." If that doesn't work, I ask "Would you be upset if your paycheck was past due?" Most people can relate to that.

But, if you can avoid stress in your life, it might be well worth the few grand extra every year to have the muscle of that factoring company behind you.

Thanks again, safe travels to you!

Again, if anyone knows about Triumph specifically, I'd like to know your experiences with them.

 

Man, I guess I've been lucky since I got my own MC 3 years ago.

I book all my loads through brokers and have never factored. I occasionally utilize a quickpay offer, however, it's rare and I ALWAYS make sure the fee is included in my negotiated rate.

Around 600k in revenue in 3 years and I've never been stiffed once.

 

If you are not paid within the terms of the contract.

File on their bond. No broker or company wants that to happen.
That is the leverage us Owner Operators can use.

I used Apex for factoring.
I still use their fuel card. I am still a "customer" but haven't factored a load since December 2017.
I no longer have the internet customer support. That is the ability to look up brokers and shippers for credit score.

I use Baxter and Bailey website for credit research now.