I wonder why we are doing it...

I don't mind 30 days on receivables, I don't factor anything what sucks is when you start getting them invoices that run 60-90 days to pay. iv got a bit north of 40k in receivables out there right now. it sucks but it is what it is. you have to have enough operating capital to keep everything going. A broker might pay in 30 days when it might take them 60-90 days to get paid. brokers that offer quick pay are likely paying long before they get paid. if the broker moves 50 truck loads per day what do you think it cost them out of pocket to offer quick pay.

you just have to make sure that your rates are good enough that its worth waiting for your money. I also want all my money not my money minus %5 to be paid quicker. If i am working for a customer that has a history of paying slow i make sure the rate is good enough to justify waiting longer for my money before i will accept the load. and by paying slow i mean grater than 30 days, all loads must be profitable regardless of time to pay

 

My preference for using conventional financing is based on the assumption you will use only what you would have factored. Thus the money will constantly replenish as receivables clear. But you are right that if SHTF and your customers don't make good on their obligations, you could be left holding the bag...

 

I do agree with you: in business there is always a loss expected. It is impossible to avoid it and each business should keep that in mind when they develop the business plan. But, saying that it is ok for others to use your equity (because those money that they pay in 30 days are part of your company's equity) just because you have money or because you have access to money is too much. It is convenient for shipper/receiver to pay you/the broker whenever as long as they have access to free money. There are two problems though... the carrier is investing in a business and has no benefit of this and the carrier unlike the bank can't make the decision of investing based on documents proving that the investments would worth the risk.

Brokers... hmm... I don't know. I understand their position but how can you trust them when things like "oh, I can't pay you more money... I am actually losing money by giving you this amount" and then you see the custom paperworks you realize that they're actually making one thousand dollars when you just cover your expenses for the load. Why did I get the load? Because I had no other choice than drive empty more than 500mi.


It is wrong to think that factoring doesn't mean accumulating debt. You can accumulate debt if the companies that owe you money don't pay. If your investment doesn't end up making money you owe the factoring company money and interest for those money. So, it is not that easy. We had factored for the first year of our business and we had been making money on our own after the first year, too. I have to tell you getting out of the factoring contract made me feel extremely free.
I do understand how and why the business is working the way it is right now. All I tried to say was that... it shouldn't be like that. Carriers are not making the money they deserve.

yes, we have been undercapitalized for right now but it was a combination of factors that led here... We are working on changing the situation. But going here made me realize that things were not as ok and normal as I have been thinking for a while.