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Factoring

OntarioVanMan

OntarioVanMan

Retired Expediter
Owner/Operator
scottm4211 said:
You're one of the few on here that will accept new ideas or different views rather than just dig your heels in. kumbaya :D
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The friends I have are of single truck operators
and they tell me things about the factoring that relate to them...I did not know they offer accounting and payroll services that would help offset the cost of dealing with them....so hence I've learned something...and that is a good thing...:D
 
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Rocketman

Veteran Expediter
My thoughts were that I could book the load, haul it, send the paperwork to the factoring co, be done with it and look for the next load knowing my money would be in the bank soon.

Would it be that simple? I doubt it, but I think it could be pretty close.

Now, if I was going to lease on more trucks and had enough going on to justify hiring somebody to take care of the paperwork, that would be a different situation. A lot of things to consider.

I just don't think most of us as leased o/o's actually know enough about the carrier's business to judge them based on stuff like this. All we really need to know is whether the trucks are being paid and how much. The rest is their business and... at least for now, I'm happy to let them worry over the details.

That OVM, he ain't made it this long by bein stubborn.
 
OntarioVanMan

OntarioVanMan

Retired Expediter
Owner/Operator
Rocketman said:
My thoughts were that I could book the load, haul it, send the paperwork to the factoring co, be done with it and look for the next load knowing my money would be in the bank soon.

Would it be that simple? I doubt it, but I think it could be pretty close.

Now, if I was going to lease on more trucks and had enough going on to justify hiring somebody to take care of the paperwork, that would be a different situation. A lot of things to consider.

I just don't think most of us as leased o/o's actually know enough about the carrier's business to judge them based on stuff like this. All we really need to know is whether the trucks are being paid and how much. The rest is their business and... at least for now, I'm happy to let them worry over the details.

That OVM, he ain't made it this long by bein stubborn.
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Rocketman and I are ancient history....lol


did I just call him old? :p
 
x06col

x06col

Veteran Expediter
Charter Member
Retired Expediter
US Army
flattop40 said:
With the thread that was shut down last week there was an aspect of it that got me to thinking. I may be out of the loop as do the big guys use factoring? I would hope not. And I would not work for someone who has to factor to pay me on a weekly basis. This indicates to me the company is unstable to handle things with any financial hiccup. Just my thought. I will sit back and let ya'll bash me.:p
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I never used factoring as a way to preserve cash flow. However, many Companys seem to have to because their "partners", ie. their Owner Operators do not hold themselves to the higher standard they hold their Carrier to(meaning they cannot go 30 days without getting their hand greased). Sadly, many "business people" in this business are really NOT business people, jes an individual looking for a steady paycheck (employee) and have absolutely no intention of becomming self sustaining, and don't have the ability for many reasons. Y'all er yer own worse enimies.
 
BillChaffey

BillChaffey

Veteran Expediter
Owner/Operator
US Navy
Not knowing much about "Factoring" what happen when the Company you have hauled, say $4000.00 worth of freight for fails to pay the Factoring company?. Does the Factoring company eat it. Or come back after the Owner (you) for the money.:rolleyes: Minus what ever % you were charged to begin with.
 
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Rocketman

Veteran Expediter
BillChaffey said:
Not knowing much about "Factoring" what happen when the Company you have hauled, say $4000.00 worth of freight for fails to pay the Factoring company?. Does the Factoring company eat it. Or come back after the Owner (you) for the money.:rolleyes: Minus what ever % you were charged to begin with.
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Depends on which factoring you choose. The non-recourse factoring is much higher (5% as I understand it), but supposedly they eat it if the customer doesn't pay. Of course, it is also my understanding that your customer's credit must be approved by them before they will take the bill.

Non-recourse factoring is in the 3% range from what I'm told.
 
OntarioVanMan

OntarioVanMan

Retired Expediter
Owner/Operator
I am with Col....

If`an individual can't float 25,000 to 30,000 over 90 days then they are not self sufficient...

am doing the math...if ya run say 15 loads a month and just take the low of 3% on EACH BOL....that is 45% of your monthly revenue...loan sharking at best....no wonder most don't make it..:eek:

or did I miss something?
 
aileron

aileron

Expert Expediter
OntarioVanMan said:
I am with Col....

If`an individual can't float 25,000 to 30,000 over 90 days then they are not self sufficient...

am doing the math...if ya run say 15 loads a month and just take the low of 3% on EACH BOL....that is 45% of your monthly revenue...loan sharking at best....no wonder most don't make it..:eek:

or did I miss something?
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I think you math is a little bit off.
 
OntarioVanMan

OntarioVanMan

Retired Expediter
Owner/Operator
aileron said:
It is still 3%, not 45%.
By your math, if I was doing 33 loads a month, and I would give up 3% on each load, I would work for nothing, right?
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you are saying it is 3% of the total runs?

I might stand corrected again.....am having a bad day I am....:D
 
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Rocketman

Veteran Expediter
OntarioVanMan said:
you are saying it is 3% of the total runs?

I might stand corrected again.....am having a bad day I am....:D
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If each load paid $1,000, then you would pay $30 for each bill = $450

If you did one load for $15,000 then you would pay $450 = the same $450?

I'm always told that the catch is that if your doing $15,000/mo and your averaging 60 days to get paid, then you should be able to get by on a line of credit worth $30,000 at the bank. You would pay what 8% annually for that? That would equal $2400/yr.

To factor that same $15,000/mo, you would be factoring $180,000 of bills for the year @ 3% and you would pay $5400 to the factoring company. So, you could save $3,000/yr by going to the bank.

Fast Edit before OVM catches me..lol : You would save $5400 by floating it on your own dime if you have the reserves.
 
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x06col

x06col

Veteran Expediter
Charter Member
Retired Expediter
US Army
Well now, does this mean i'm not going to get any crank when I mention that Contractors usually don't hold themselves to the same standards as their Carriers????

Kinda one way.......ain't it?????
 
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Rocketman

Veteran Expediter
To get back to the OP's point. The company I'm leased to has something like 60 leased units, I think. If you figure $15,000/mo per unit, that means they are floating $900,000 per month. That's a lot of cashflow to have to cover.

A large co with 600 trucks, that would be $9m/mo to cover. Again...I think those numbers may be a little high, although we are talking about money paid to the carrier not to the truck.
 
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Rocketman

Veteran Expediter
x06col said:
Well now, does this mean i'm not going to get any crank when I mention that Contractors usually don't hold themselves to the same standards as their Carriers????

Kinda one way.......ain't it?????
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I think I'm agreein with ya col. I've always kinda felt that if the contractor needs his money faster, then maybe he needs to pay for the factoring. We're on a 3 week pay system. Yeah it's nice to be paid faster, but I'm not gonna tell somebody they gotta float a $mil outta their billfold to keep us paid.
 
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