New To Trucking Factoring - What's normal and is it worth it?

[wildbill_az]

Hey Guys,
I'm weighing my options as far as working with a factoring company is concerned and I'd like to hear how you all decide between the different options that are available.
Specifically I'm wondering what rates are normal and what pros & cons you've experienced with working with a factoring company in the first place.

I'd really appreciate hearing about this from you all as you have much more experience than I do!

Thanks!

 

[Mike]

You are giving away 2 to 3% of your income for something that takes zero time to handle on your own. Paperwork has to be sent to someone regardless. You either send it to a factoring company, or you send it to a broker.

If you need cash flow in the beginning, use the brokers quick pay options and build up your cash flow as fast as possible. It makes no sense to give away money.

 

[mndriver]

Factoring will give away less money, 1-3%, than quick pay which can top 6-7%.

The benefit of quick pay is you can pick and choose what you want/need immediately.

Factoring generally requires a contract that requires you to factor all loads.

Factoring/quick pay is nothing unique to trucking. Just their terms. If you’ve ever received a bill from say a plumber or an electrician or other business and you see Net30 or 2/15, you’re seeing factoring/discount accounting. No difference really from an accounting perspective.

It just means you pay 100% of the bill at 30 days or you’re free to take 2% off the bill and pay in less than 15 days.

You could have picked a safer topic to bring up like politics or religion.