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Please tell me your opinion about this article and then I will tell you my opinion about a factor I dealt with.

 

Should have credit set up with a bank at far lower rates than a factoring company. If you wait untill you need it then you pay the higher rates. Many find out the hard way about "non-recourse" when they have to repay it. The contracts have very specific wording for that.

 

This above article reveals exactly what I experienced with FIRST LINE FUNDING GROUP out of SD.
The whole company is run by women.I am like, women are mopre likely to treat me better than any other factoring company.I had called about 6 factoring companys prior to signing onwith them.Most of them wanted a 6-12month contract at between 4-6% factor rate.The better rate out of all of them was Apex which I think was a non-recourse at 3% and a 90% advance until the invoice was paid by the broker/shipper.

So, I signed a 6 month contract with First Line Funding group which was a recourse factor at 3% upon an invoice paid within 30days.3.5% factor upon an invoice paid after 30 days and so on............

I sent my first 4 bills in.I even sent in LS and Mercer just to keep them off my back.Although there was no limit in the amount of invoices I was to send them, they kept emailing me about sending in more invoices.


The first straw was when they were taking too long to bill the brokers.It took them about 3 weeks to even start billing the first broker.Because of an "assignment" issues with LS and Mercer, after they billed them, these 3PLs sent me the money instead of mailing it to First Line Funding.I then sent Mercer and LS' checks that I recieved.The other two bills was not being paid fast enough from my opinion, and I had to go behind their back and call these brokers to pay them on time.In my opinion, they intentionally wait soo long to bill the brokers and in that case they can make more on their end.Numerous phone calls I made to them was never returned.After I made sure they got paid by every broker, they realised I had stopped sending in anymore bills(remember there is no minimum amount to send in).They still never returned my calls about getting my "reserve" on those 4 bills becasue they realised I wasn't sending anymore bills.


After reading Donna Ryun's OOIDA article, I have taken the $500 they owe me as a loss, and so no more factoring for me but rather a quick pay(1-4%) with any broker with good credit.

The only thing I might be missing is getting a fuel card from Apex Factoring or anyone else that may have 20cents off the pump price.
I am still researching on a better fuel card like B2B or schneiders'.
Just like you said Chris, my credit Union may also be a good source in getting the recievables.

 

You are much better off if you take a quick pay with most brokers rather than factoring the receivable. Some quick pay programs are very expensive. I had one ask for an 8% discount on the bill. If I use quick pay I usually don't do it unless it is a fairly low rate. Most charge around 1 1/2-2%. Henboy, I don't understand why you would factor Landstar who charges 1 1/2% or Mercer, who doesn't charge anything, for quick pay. In fact, Mercer will pay within about an hour of receiving your bills through Transflow. It also sounds like your factor may be having some problems of their own if they haven't paid your reserve.

 

I have learned that quick pay is sometimes not so quick and they still charge you quick pay rates
I use quick pay only with my past proven quick payers ( within one week of delivery) and factor the rest

one word about factoring,you might want to check the brokers credit with your factoring company ( to make sure they will buy the invoice)before you haul the load if you are not familier with them because the load boards may say they have good credit and in reality they do not.
I also get 30-40 % fuel advances whenever i can to pay my fuel as i go and get the cash price which saves me money

around here,most banks do not factor loads so that leaves them out

 

To me, quick pay is where I can receive my money within 24-48 hours from the time the broker or shipper receives the paperwork. I have limited myself on the number of companies with whom I am doing business. The main reason is the current economy.

WrongwayTommy, you make a good point about using factors on some accounts. I have a factor that I can use when I want. I will sometimes use them the first time that I do business with a new broker to see how they pay. Most of the time when the factor takes the paper the account is good for the money. Unless it is a load that I get from someone whom I have previously done business I ALWAYS check their credit. A company that was in good shape a few months ago could be in trouble today. One of the largest brokerage firms used to pay in a very timely manner. Most invoices were paid within 20 days without quick pay. I checked their credit a few months ago and they are now paying about 35-40 days. Even the major brokerage firms can have cash flow problems. Some factors have the ability for you to check an account's credit online before you take a load.

One advantage of using a factor rather than a line of credit at a bank is that there is no debt involved when you factor. If your credit has a few dings it doesn't make any difference when you factor since it is the credit of the broker or shipper that comes into play. You may pay less in fees or interest if you have a line of credit. When you use a non recourse factor they assume all the risk. When you use a line of credit it is up to you to take care of the receivable. If they don't pay then you eat the receivable.

If you use a line of credit then you will need to make sure that anyone whom you extend credit has the ability to pay you. That means that you may spend additional time checking credit than if you factor.

 

Now who said you have to rely on the loadboards for credit ratings?Anyone who goes and gets their MC should know within a month that the credit ratings on the loadboards are usually outdated.I first signed on with D&S factors and when they realised I wasn't sending in any bills they locked out my account in doing credit checks on brokers.I then found my own broker credit ratings on a site and that is what I use.It is pretty much accurate when comparing it to USIS or RTS credit.I was thinking the banks wouldn't factor either and not even a line of credit in these hard times.


The brokers that I was suspicious about always said they didn't do quick pay or hesitated and wasn't sure if they had enough money in their reserve to do a quick.NO QUICK PAY WITH A BROKER, THEN NO HAULING LOAD FOR THAT BROKER.

Then you have the others who call you out of nowhere because they saw your whereabouts.Guess what............ you punch in their MC and their credit and paymnet history comes up ****ty.You better not even ask them if they do a quick pay.

 

I believe that D & S Factors will continue to give you access to their credit files if you send them one factorable receivable every 3 or 6 months. There can be some differences in how a credit service rates the same account.