Wonder what are the best ones out there, Wonder if they due their due diligence when they accept the loads to be factor. I understand most of the factoring companies has a recourse (You have to buy it back) of 30-90 days to the company they factor for. Seems like you could submit company's to them in advance they could check them out before the factor an load. Your thought on this will be appreciated ..
Do you use a factoring company
- Thread starter chs007
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CharlesD
Expert Expediter
Factoring is good when you're small because you get pretty good value for what you spend, but when you grow the cost is ridiculous. When we just had a couple cargo vans running, the factoring cost was probably less than what it would cost us to hire someone to do billing and payroll, but with our current size, we paid out over $70k last year in factoring fees. If you're planning on expanding as a carrier, you will want to look into other cash flow options so you can pay drivers before you collect. Now we're looking into credit lines and other ways to build up the cash reserves so we can get off factoring. That $70k is only going to get bigger as we grow and that's a lot of money.
We use Coast to Coast Capital out of PA and they run credit on any broker before doing the load, so the recourse never really comes up.
What I would advise is not factoring all your customers. Anyone who has an in house quick pay or pays in a couple weeks or less you probably don't want to factor. Only do the customers you absolutely have to so if you grow down the road it will be easier to break away from it.
We use Coast to Coast Capital out of PA and they run credit on any broker before doing the load, so the recourse never really comes up.
What I would advise is not factoring all your customers. Anyone who has an in house quick pay or pays in a couple weeks or less you probably don't want to factor. Only do the customers you absolutely have to so if you grow down the road it will be easier to break away from it.
Charles, do you still have to keep up with the billing in house after you factor? I was under the impression that once you turned it over to a factoring company, they would bill the customer and keep up with who has paid/not paid, etc. A friend told me no, you still have to do all that. The factoring company just loans money per the bol basicly.
CharlesD
Expert Expediter
A good factoring company will take care of the billing and the follow up work. You just send them your paperwork and get paid.
Thats the way I always understood it. I'll pass that along. Thanks.
Who would you consider a good factoring company
CharlesD
Expert Expediter
We've only ever used one. I mentioned them in an earlier post in this thread. I can't speak for any others because we've never used any of them. We've been with Coast to Coast Capital for 5 years now.