O/O - Factoring Versus Net 30 (60/90/Never)

You may want to use that search box ^^^ up there while you're waiting for replies. It's worked well for me in the time that I've been here. There are quite a few threads here regarding factoring and cash flow, and I'm sure that you'll find answers to a lot of your questions pretty quickly.

 

I am leased to a carrier but run pretty much like any independant under their own authority. My equipment is paid for, I forgo getting paid weekly and wait on the money in order to get an extra 3% and have been operating this way since Jan 1 of this year. If you've got the capitol to wait it's worth it, go ahead and wait. Last I checked several weeks ago I'm up $3,000 by doing it this way. Many of the larger brokers will pay in less than 15 days CHR and Landstar come to mind, Mercer, although I've never dealt with them so why in the world would you give them 1 or 2% for quicker than that? I've seen CHR loads pay in 4 days and that was without giving them quickpay money.. If you can weather it, go for it, definietly worth it. On the other hand I have learned that some of the smaller brokers are really slow to pay even if there are no red flags. For instance there is one sorry excuse of a carrier/broker based out of Birmingham, AL that still owes me for a load I delivered on Jan 13th. My plan from here on out is to stick with the ones that have been keeping me busyt and paying quickly and avoid the ones like this AL based outfit, which btw when I get my money I will be posting up full details on who they are so others here can scratch them off their list. Have 3 loads from Jan and a few from Feb that have me really ticked but it's not going to be the end of the world if I never get the money from one or a couple of them.. Just a bitter pill and a hard lesson.. Even if you can cushion a blow like that you still have to be picky and always want to work with the quicker pays..

 

I have crappy cash flow. Just became an O/O beginning of the year. I do NOT factor. However I do use quickpay as I need it. Sometimes I just end up running short hauls till the checks cOme that I need to run hard again. Most of the brokers are pretty good. Check gets mailed on the 30th day or if it falls on a weekend it'll get put in the mail the following day. Don't be afraid to call these people either. I have a broker out of Gainsville , Ga that claimed the old lost paperwork bit. Finally got my check and it was close to net 60.

 

Currently factoring through D&S Factors. It's 5% and I have had no big problems, really just small hiccups. I only use brokers that they allow currently.

 

most of the bigger brokers these days have their own quick pay which comes out cheaper than using factoring companies

 

mercer will pay same day you scan paperwork, with no fees at all.

 

I am not currently using a factor. I used D & S for a number of years. I stopped using them this year when they asked me to pledge personal and business assets even though they are a non recourse factor. It is the broker or shipper that is responsible for payment. Non recourse means that they cannot charge back the invoice if the broker or shipper doesn't pay. Had I signed their new addendum to my original contract with them, they could have charge me back for any unpaid invoice even though I was paying a premium for the non recourse. I refused and cut my ties with them. You need to be very careful as to what you sign with any factor. Make sure you understand completely what you are signing. There are both recourse and non recourse factors. The non recourse factors are usually less expensive, but not always. The non recourse factors usually have a sliding scale on their fees based upon the length of time that the broker or shipper takes to pay them. After a certain time period they will charge the entire unpaid invoice back to you.

Many brokers do offer quick pay for a discount on the invoice. It is usually 1-2%. Some charge more. If you can wait 30-45 days to receive your money then it will mean more to your bottom line. Starting out it may be difficult to wait that long to receive your money.

Most of the time if a factor takes the business then the account will pay as agreed.

 

Non recourse factoring is not what it implies. It only applies if the broker went bankrupt. If a broker decides to short pay you are on your own. Most of the factoring companies won't even call to find out why they short paid, they just bill you. I have used D&S, and also used ABC, I found ABC is little better IMO, because I never have to waist time calling to check out a broker, they have a good website for that. However, their green light isn't always the case, If you get a green light and put freight on your truck, and for whatever reason that broker is no longer acceptable, you are on your own. If you decide to use one, go to one that you do not have to factor every invoice with, don't factor companies that pay on time or have their own QP.

 

I have a friend who quit doing business with D & S because the broker paid short. They never notified my friend. I never had that problem with them. I went with them originally because I didn't have to factor every invoice and they didn't have a minimum. Some factors want you to factor a minimum amount each month and others want you to factor all of your bills. I can't see paying a factor when I can get my money in a couple of days from the broker. It pays to check around. I probably need to set something up with another factor, but since I usually only do business with a few brokers on a regular basis, I don't need to factor their business. They pay quickly and have good rates.