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

I would highly suggest that you stay away from factoring. I did until I hired my first owner operator, and once you get hooked on getting your money the same day you FAX the bills, it's hard to get away from. There are so many brokers that offer quick pay for REASONABLE fees, that an upstart should be able to do pretty good until building up operating expenses. Once you get 10-15k in the bank for operating expenses, you can keep all the money by just waiting for the check. Let's face it, even 1.5% quick pay equals out to about 18% interest on a 30 day pay cycle.

 

I've had both short pay me. I will also add that neither one helped with collections, I had to call myself, after a 10 minute phone call, all was cleared up.

 

I factor all my receivables except one broker who pays next day from faxed or email invoices; and a direct shipper who pays in 7 days and ask that I not factor his bills. I presently use Match Factors, Inc. been with them for 1 1/2 years and have yet to have a problem. No pledging of personal property and assets. I can factor as many or as few as I want. Their fee is a flat 5%. They also hold 5% reserve up to a certain amount base on your account balance. When you reach this amount they stop taking it. If you deiced to leave they will send you the reserve after all your receivables are paid. I have yet to have a charge back in the time I've been there. I do my invoicing in the truck while I'm waiting. Email it in, then put the originals in the mail on the week end. I use their web site to keep track of everything.

I can wait 30 to 45 days for payment, but I prefer to factor. I'm a one man show. I don't have time to do; nor can I afford to pay an employee to do what the factor does.

 

Understand this everyone. Most small brokers that go out of business will not file BK and just close the doors. And despite having a bond it is all but worthless. It seems that you can save some of the fee and go recourse. Paying a extra couple points for this insurance that is rarely used.

Kinda like me adding an extra rider on my health insurance to pay out extra if I get ovarian cancer.

 

If your broker is hitting you with additional fees, then that's not a broker I'd probably want to haul loads for if they're being underhanded.

I run with three brokers right now. One pays within 5 days via direct deposit for 2% on emailed BOLs. One pays same day (usually within a half hour) for 5% via emailed BOLs. The other pays within a week via mailed BOLs for 5%, but pay you half the load up front after pick up for free, so it actually comes out to be 2.5% if you figure that way. Only nuisance there is mailing the bills in, rather than scanning and emailing or faxing them.

I had contemplated going with a factoring service, but you're tying yourself down into a contract.

Now, broker #1 will pay net-30 for free. Broker #2 will pay net-30 for free. And the last one is net-60 for free. All in all, they're decent brokers that give decent rates, that treat me fair. Give me access to loads that never will see a load board, call me up and give me my pick of which loads they have that day since I'm a regular, and we both are trusting of eachother in that they know what type of service I deliver, and I know what type of honesty, good pay, and 'no excuses' I'll get from them. So, using them for quick pays isn't an issue in the slightest.

 

Send them a handwritten thank you note for the business Sly. Maybe stuff a $25 or $50 gift card,depending on how much business you do with whichever one,so they can enjoy a nice dinner with the wife on you. 3No-one ever does that sort of stuff and it sets you apart. Guerrilla marketing. And 30 days might become 15. I have had that happen with one broker.

 

I agree, quick pay ONLY when necessary. Like only do every other load then slowly move away until your actually getting 100% of the money your owed. Amazing the guys who do some crazy stuff to make money (like fuel mileage scams) all while giving thousands away in factoring/quick pay fees.

 

There are some brokers that will pay the same day as they receive your bills and not charge any additional fees. I know of a couple that charge 1 1/2-2% and pay within 24-48 hours from the time they receive your bills and invoice. If a broker charges 3% or more to give you your money then you may be better off finding other brokers that don't charge such high fees or contract with a factor. It is better to be in a position where you can wait for your money, but until you have a good bankroll you need to have cash flow. If you can't do the quick pay with brokers then you might try dealing with a factor. Avoid factors that have minimums or fees other than the percentage that is charged.

 

Hmmmmmm....

Just joined.

6 posts (in various threads).

All pretty much pimping interide.

What's your extension over there?

Rick

 

Not at all bro - just intimating that you might be working for said factor - which is not a BAD THING per se'.

I STARTED the thread to get more feedback on what folks are doing with their A/R.

2.7% is very low for non-recourse factoring.

If you do NOT in fact, work for Interide - please accept my apologies.

If you DO, than just say so - and maybe provide some more details about their policies regarding: recourse/no-recourse factoring, min volume requirements, UCC filings (i.e.: how much it costs to get the UCC removed, back out of your contract), requirements to factor all BOL's from a particular vendor - once you've factored one, do they have a credit check system/approved shippers list, etc., what their "reserve/holdback" is.

Look at it from a DIFFERENT PERSPECTIVE - someone comes on, in one particular conversation, with no posting history - and posts specifically about one vendor in every post. What might you assume from that?

Plenty of recruiters post in the "trucking company specific" discussion forums, "touting" their particular company. No big deal - but it would be easier to see where they're coming from, if they just came right out and said they were a recruiter for that company (versus passing themselves off as a driver who JUST LOVES the company).

See where I'm coming from?

Rick