Do You Factor

[mndriver]

What can be done to protect oneself from these types of shenanigans if the credit info is not correct? Also what are these accounts saying that are 60-80 days overdue?

No clue.

But business credit does not have the same safe guards that consumer credit does.

 

[gearjammer]

while you are running the highways and are in the neighborhood stop by and pick up the chech in person might help if you can block everyones cars in and let em know you will move when you get paid otherwise they can camp out just as you are prepared to do

 

[Mike]

while you are running the highways and are in the neighborhood stop by and pick up the chech in person might help if you can block everyones cars in and let em know you will move when you get paid otherwise they can camp out just as you are prepared to do

Not a bad idea.

 

[ironpony]

No, not a chance. Factors in trucking are closer to loansharks than anything else.

First, the agreements are shadier than a truck lease-purchase contract, and frequently include clauses that require you to things that are contrary to your best interest. Factor all your bills, allow them to reach into your bank account and not only deposit funds, but withdraw funds without prior consent, etc. Sometimes it is difficult just to extracate yourself from these agreements.

Second, the interest specified is not in terms of APR. It's short term interest, that rapidly adds up to well beyond what many think it is. You're better off getting a line of credit from a bank, or even a high interest credit card to fund your operation than to deal with a factor.

 

[Keep Rollin]

No, not a chance. Factors in trucking are closer to loansharks than anything else.

First, the agreements are shadier than a truck lease-purchase contract, and frequently include clauses that require you to things that are contrary to your best interest. Factor all your bills, allow them to reach into your bank account and not only deposit funds, but withdraw funds without prior consent, etc. Sometimes it is difficult just to extracate yourself from these agreements.

Second, the interest specified is not in terms of APR. It's short term interest, that rapidly adds up to well beyond what many think it is. You're better off getting a line of credit from a bank, or even a high interest credit card to fund your operation than to deal with a factor.

This is the kind of information new o/o's need from the experienced trucking company owners. Thanks for sharing. Many guest viewers see these posts and are helped by the wisdom contained therein.

 

[mndriver]

This is the kind of information new o/o's need from the experienced trucking company owners. Thanks for sharing. Many guest viewers see these posts and are helped by the wisdom contained therein.

And it's also a lot of false hype

 

[ironpony]

Is it? 5% short term isn't 5% APR, and from what I've seen, many do not have a clue to the difference.

 

[mndriver]

It's no better or worse than your precious lease purchase.

One needs to do their homework

 

[ironpony]

Damn makes me feel like my $30,000 in personal credit cards would get me through the rough patches of O/O just fine.

$30,000 can get eaten up in a hurry.

 

[mndriver]

How much of an emergency fund do you have? $100k?

I had to cover $56,000 last year alone.

Doesn't include regular stuff like tires, brakes and oil changes

 

[ironpony]

How much of an emergency fund do you have? $100k?

Emergency fund? You can go through $30k in operating expenses in a heart beat. I covered $28k in repairs in '16 plus operating expenses. I work at keeping enough uncommitted cash on hand to buy a crate engine (minimum,) or as a down on a different truck. I still feel uncomfortable that its not enough.

 

[mndriver]

A 3/4 long block series 60 12.7 is $30,000 plus a $10,000 core

 

[Mike]

Damn makes me feel like my $30,000 in personal credit cards would get me through the rough patches of O/O just fine.

It would get you through fine for start up costs. That is, unless you had a major repair show up within that first couple months. The latter is a possibility so you want your homework done really well when initially purchasing equipment.

Use your credit to get started, but build a maintenance account as quickly as possible. A large maintenance account if it is older, out of warranty, equipment.

 

[Mike]

I work at keeping enough uncommitted cash on hand to buy a crate engine (minimum,) or as a down on a different truck. I still feel uncomfortable that its not enough.

Similar for me. I build a large maintenance account that also doubles as a new truck account.

My current truck is financed. My next truck might be financed, but nowhere near 100%. Plan is to be able to buy it outright.

 

[ironpony]

This is what I was referring to. Presumably you have income before the 30k you pissed away on credit cards comes due.

28k in a whole year... well you've got stupidity issues if you can't cover that.

I'm looking at trucks with documented overhauls.

Documented overhauls??



That ain't gonna keep expensive shit from breaking, nor will it fix a botched in-frame.

 

[Mike]

Documented overhauls??

Why is that funny? If I'm buying a truck that has had an inframe or engine replacement, I would want documentation on it as well. Especially if it still has any warranty. If for nothing else, though, proof that there was actually an inframe.

 

[tommyh]

this is my experience
I tried dealing without a factoring company and before I knew it the invoices was 50-90 days old and I needed money.
I called and called.I then went to a factoring company,2.9 percent.The factoring company pays me 95 percent up front,with in 48 hours
at no extra fee.
they keep 5 % untill the bill is paid and put the rest in my cash reserves,minus their 2.9 % and 1 buck a invoice fee

I factor who I like,I don`t have to factor everything and hey cannot take money out of my account.
I let them hassle with the late payers,but the longer it takes the more they charge,like they go up on the percentage rate 1 % after 60 days.
I use the factoring company to do credit checks for free.Twice in 5 years I have had problem loads.
One was 300 bucks and the other was 1100.
I called Baxter Baily collection service in Mississippi and they told me the 300 one was gone,that the guy was 200,000 in the hole.I did not check their credit first.My bad
I turned the 1100 over to them and in 10 days they had me a check,minus their percentage which I wrote off as a loss along with the 300 bucks.I will never use a lawyer to try to collect money owed,I will use Baxter Baily Collections from now on.

as far as credit scores go,the load boards are off big time.I never depend on them
Since my factoring company dished out the money,I let them make the call on credit.

I haggle with the price with brokers and I try to haggle a little harder to cover the factoring fees.I started out with nothing but a truck and van and a credit card and built my stuff from there.I don`t want to take time to run down deadbeats or slow payers when I could run another load or two or go screw off at home.
to me it is a no brainer but like said above,read that factoring company contract very very carefully

one last note,when i send the paperwork in to the factoring co,I also send it in to the brokers ap to help keep them honest

 

[ironpony]

Why is that funny? If I'm buying a truck that has had an inframe or engine replacement, I would want documentation on it as well. Especially if it still has any warranty. If for nothing else, though, proof that there was actually an inframe.

Of course. I think the young-un means that's going to protect him from spending money like it's going out of style.

 

[Mike]

,I will use Baxter Baily Collections from now on.

What percentage did they charge you? I may be having to call them for the first time this week.

 

[tommyh]

I can`t remember excally but it seems like ,25-35%
it was high but a little is better than none