It is probably a good idea to get away from factors when possible. I know of some who regularly factor whether they can afford to carry the receivables or not. One advantage of factoring is that you have the advantage of receiving your money to keep your business rolling but you don't impact your credit or increase your financial obligations since you are not borrowing money. Your credit doesn't come into play with factoring if you are the one who is doing the factoring. Starting out most people don't have any business credit. Some may start with problem credit. Your poor credit or lack there of doesn't come into play with factoring. There is a factor who works with new companies to ween them away from factoring. I believe they are based in Memphis. I think the name is Bankers Trust. I receive information from them from time to time wanting me to factor my receivables to them.

There are also some brokers who offer a "quick pay" option. This is a cash discount for early payment. Discounts can run from 1-8%. Many companies offer a discount for early payment. It isn't uncommon for some manufacturers to offer terms such as 2% 10, net 30. That means that if you pay the bill within 10 days you can discount the invoice by 2%. Otherwise you need to pay the invoice in 30 days without any discount. Those type of terms have been around for many years.

 

I've been using Apex Capital LP for almost a year now and would highly recommend them. Their service has been very good and everything has been up front.

They are a recourse factor but I have not lost a single load because they stay on top of broker credit (which I check before signing a confirmation) and they are very active on collections.

Their fees average about 3.5% but since last August when they hooked me up with a fuel card I have saved about half of their fees back each month on fuel discounts. I was very skeptical at first but they have won me over. The discounts can be as much as 40 to 50 cents a gallon at times. Their website is very good and has a fuel finder that shows you all of the fuel prices (including discount) along your route each day. Invaluable service right there.

There is no way I could afford to pay someone to keep up with collections the way they do. Every time I call with a question about an invoice they have the complete story on it. They are very much on top of everything.

I had planned on getting away from factors as quickly as I could but at the net cost (after fuel discounts) and the service they provide, I am now planning to stay with them indefinitely. I think it is a very good value. I sure don't want to spend all my time chasing checks.