Rate Confirmation Question

I have a question about billing, if you get a DIRECT haul (your own customer) and they except your rate, how much time do you give them do you pay once they get billed ? And do you give them like 2% if they pay within 7 or 10 days ?

 

Some direct customers are real good and print out a check the day the get your bills and some take anywhere from 30-45 or even more.

I wouldn't offer any incentive to them for quick pay, but thats just me!

 

Yup, Spanking is right. Also, they probably do not have a bond like a broker so if they fail to pay you have little recourse other then to take them to court instead of filing against their bond.

I have one shipper around me in NH and they pay immediately when they receive my invoice. I don't think that's the norm though.

 

With my customers it's 15 days from date of invoice, most abide that some wait till the end of the month.

 

Most wait 30 to 45 days in the real world no matter what you put on the invoice

 

Bill's talking about the annualized rate. If your factoring company carries some amount for a month at 5%, and just say you do that every month, you will have an APR on that monthly carry of 60%.

There are better and worse deals out there at "5%". 60% illustrates a worst case. The company I'm using (not for all customers) does a jam-up job of collection and accounting. They are my barking dog and have incentive to do so. After all, if I get paid, so do they. I've already had them go to bat for me on a collection and they get-r-done. On the accounting side, I only need to bother with collections when I look on my account page and check status and reconcile invoices. So there's more to the value proposition than just floating invoices in my case.

The hidden benefit to having my factoring company do the collection is that they are an 800 lb gorilla, collecting on thousands of other carriers behalf. Probably dozens of carriers on even small broker accounts. That's leverage. When I call them I'm just someone else to ignore since I may have only hauled one of hundreds of loads they sold over the past month or two.

I'm not saying factoring is the answer for everyone, but it's working for me.

 

Those factoring companies don't do much good if the broker is going under and when they do, they typically hold out on everyone taking 10's of thousands in their pockets with pretty much nothing happening to them.

A brokers bond is only $10,000 and that's eaten up pretty quick. And by the way, when you file on their bond it's not who files first but who took the first load and so on until the bond is gone.

Then their are recourse and non recourse companies and also ones that require you to sign a commitment for a certain amount of time so once your into them you have to use them for a particular broker until your time is up whether you like it or not.

 

This is the APR so that people can compare apples to apples. Some people think that this is a great rate compared to a loan at 10% at a bank. But the bank rate is an APR and the factoring company is a flat fee. 60% is based on a 30-day pay at 5% fee.

 

I do not offer a discount and for all of my clients it is based on check runs. One cuts checks twice a month and the rest seem to pay weekly.

I am not worried about them not having a bond as most of my invoices are never over $2000 with any of them. I am negotiating with a new account that could be a couple grand a week and if they do not pay weekly I may look at a factoring company for them just to reduce my exposure. But this has been part of my discussion with them in setting the rate.

 

I've never factored, don't they make it hard to get out of the contract you sign with them? Big Bad Bill # $2000.00 a week billing and assuming you are a smaller co. they should be willing to set up a bi monthly billing cycle.
The majority of my work is ltl I've never had a co. get that deep into my pocket, let us know how it plays out.