Load factoring.

[arky]

I've got a few questions about load factoring. I'm not doing it now and may never...I'm just curious.

It's my understanding that there are several variations of fees vs service. It is also my understanding that the fees range from 3%-5% depending on the amount of recourse liability involved.

It just seems to me that 5% for a non-recourse factor would be pretty cheap unless they are VERY restrictive on which accounts they will factor.
So here's my questions?

1. How hard is it to use factors? Do they not require some sort of credit check on the shipper/broker before they will factor the bills? I'm sure this would depend on the amount of risk/recourse involved?

2. When getting loads off the load boards, do you have time to run credit checks, etc on these brokers before accepting loads? I can see where you could loose some loads doing this...and probably the better paying loads at that.

3. What are the actual rates most of you end up paying for factors? Does anyone use a 100% non-recourse factor? If so, how much do they charge and what do you have to go through to get them to accept a bill?

Ok, that's all I can think of for now.

Thanks for the help!

Arky

[DD60]

I've got a few questions about load factoring. I'm not doing it now and may never...I'm just curious.

It's my understanding that there are several variations of fees vs service. It is also my understanding that the fees range from 3%-5% depending on the amount of recourse liability involved.

It just seems to me that 5% for a non-recourse factor would be pretty cheap unless they are VERY restrictive on which accounts they will factor.
So here's my questions?

1. How hard is it to use factors? Do they not require some sort of credit check on the shipper/broker before they will factor the bills? I'm sure this would depend on the amount of risk/recourse involved?

2. When getting loads off the load boards, do you have time to run credit checks, etc on these brokers before accepting loads? I can see where you could loose some loads doing this...and probably the better paying loads at that.

3. What are the actual rates most of you end up paying for factors? Does anyone use a 100% non-recourse factor? If so, how much do they charge and what do you have to go through to get them to accept a bill?

Ok, that's all I can think of for now.

Thanks for the help!

Arky

I use D and S factors and they supply overnight trippak envelopes if you have an account with them. They are 5% flat nonrecourse and offer free credit checks. If you see a load on the board you are interested in go ahead and book it and THEN do a quiick credit check to see if it is factorable. If their credit is flaky or they aren't factorable you can still cancel the load. Just don't sign the rate confirmation and you can back out of it. This is also one good reason to get in the habit of using the same reputable brokers and not some flybynight broker no one has ever heard of. Credit checks only take 2-3 minutes to do. Im not sure how strict D and S factors are as far as credit histories go but if they won't factor a load for a broker it might not be a good idea to haul for them. When you want to factor all you have to do is put in the original copies of the BOL and a copy of the rate confirmation sheet and throw it in any trippak box. It then gets overnighted and you should have your money in your account the next day if you have direct deposit. Factoring companies that charge 1-3% and are recourse usually have a 8-10% reserve they hold on your money until the broker pays. If the broker is late than they deduct late fees from that reserve. D and S advances the whole 95% up front with no recourse and no other fees. It costs nothing to get set up with them and they have no limits as to how many loads you need to or can't factor. I would get set up with them and use them once in a while if you need them.

[Bandit102]

I've used Apex for years. I factor 95% of my paper, pay 1.5% with the roucourse and reserve thing. I have never lost a load while doing a credit check and I credit check EVERYONE. I am very very happy with the service. I think my rate started at around 3% years ago, but they get better with time. Have for us anyway.

[jonboy]

I have to echo everything DD60 said, because I've been using D&S for two weeks now and its fixed my receivables hassles. We only have one place to send the bills, invoice, and load confirmation. The 5% includes the Trip Pak, credit check, and really, if they won't factor the company, you probably would be unwise to hold the paper yourself anyway.

They won't factor brokers that have been in business less than a year, even if they pay their bills.

I'm only using brokers that are factorable through them, and I get my bill in the Trip Pak box the day they are signed, they are scanned and sent to D&S the next day, I get paid the next day through direct deposit into my bank. That is getting paid on the second day.

They also can pay you through a fuel card, and you can then direct your money how you want it.

There are other factors with lower percentages, and I have no experience with them, so I will not offer any opinion, although the lower rates are desirable.

jonboy

[arky]

I get my bill in the Trip Pak box the day they are signed, they are scanned and sent to D&S the next day

Please clarify this. It's my understanding that they need the original BOL? I'm assuming that the "scanning" your talking about is just making copies of the BOL for your own records?

Also, how do you go about doing the credit check? Do you just call your factoring company with the broker's info and let them do it?

Thanks for the help guys. This is something that I would definitely do if I were to go independent some day. It seems to me that the 5% would be well spent for a new O/O. The money is in the bank quickly and no worries about collections. Just the peace of mind would be worth alot.

Thanks again!

Arky

[DD60]

I get my bill in the Trip Pak box the day they are signed, they are scanned and sent to D&S the next day

Please clarify this. It's my understanding that they need the original BOL? I'm assuming that the "scanning" your talking about is just making copies of the BOL for your own records?

Also, how do you go about doing the credit check? Do you just call your factoring company with the broker's info and let them do it?

Thanks for the help guys. This is something that I would definitely do if I were to go independent some day. It seems to me that the 5% would be well spent for a new O/O. The money is in the bank quickly and no worries about collections. Just the peace of mind would be worth alot.

Thanks again!

Arky

Yes,scanning is basically making copies for your records and sending the originals to the factoring company. That is what I do. D and S will supply trippak envelopes to your address free of charge. After you deliver a load just write down the load number on the envelope and put the rate confirmation and original BOL in the trippak envelope and drop it at any box location. Very simple. They will direct deposit the money in your account the next day. When you call their 1-800 number it will ask for an option to do a credit check.Press it and when the lady answers just ask for a credit check and give the broker's MC number. They will pull the broker's credit up by looking up their MC number and tell you if they are factorable. It usually takes a few seconds. You don;t have to do a credit check first before you book the load. Go ahead and book the load and than do a quick credit check by calling their 1-800 number. If there is a problem and the broker isn't factorable than you can call back and cancel the load. The load isn't officially yours until you signed a rate confirmation.

[arky]

Great explanation! Thanks alot!

Sometimes you just gotta explain things in great detail to us rednecks..LOL

Thanks again everyone!

Arky

[jonboy]

I get my bill in the Trip Pak box the day they are signed, they are scanned and sent to D&S the next day

Please clarify this. It's my understanding that they need the original BOL? I'm assuming that the "scanning" your talking about is just making copies of the BOL for your own records?
Arky

Arky, D&S wants the original bills (I make a copy for my records), my invoice, and the load confirmation.

The Trip Pak (with the original bills), does not go to D&S, but to a scanning facility, that scans them and D&S gets them immediately. As far as the original bills, I bet they get mailed at a later time.

I'm using Truckbytes software to generate my invoices, and it takes care of my receivables, trip reports, fuel tax data. It costs about $20 a month.

hope this helps,

jonboy

[Joymax_Trans2]

Bandit102,

I'm interested in knowing more about Apex. I currently use D&S Factors and having communication problems with them when there are problems with their system. Can you please PM me with more specifics.

Thanks

[Joymax_Trans2]

If you are going to factor most of your bills, do not factor with D&S Factors because they make more work for you if there is a problem. They do not let you know when there is problem with a load. You only find out after you haven't been paid at all or shorted on payment. You have to do all of the follow-up work yourself.

Our relationship with D&S Factors had ended because they got tired of me complaining and we got tired of them jerking us around and now there playing games with us - taking their time sending us back our BOL that they refuse to fund. The longer they take, the longer it will take for us to bill the broker directly and receive our money. I found out while trying to log into our account to see the status of recently submitted bills. When I called them, I was told the account was suspended. I asked them when were they going to tell me and they did not have an answer.

I had to contact OOIDA and get them involved in order to get some answers and get this thing resolved. I can't do business with existing brokers because they won't send release letters until our account has a zero balance, which could take 30 - 45 days or longer. I now have to concentrate on doing business with the brokers whose bills I don't factor. Our money is in limbo. I've learned a valuable lesson and the down side to factoring. It's a good thing that I did not use them exclusivley to fund my receivables.

[GMAN]

Whether you are dealing with D&S or another factor, it is a good idea to check with them prior to sending in the bills to make sure they will take the business. I don't factor all of my loads. If I plan on factoring something, I always check with factor first. I figure that if they won't take the broker or shipper, then I don't need to do business with them. I always keep a copy of the BOL just in case there is a problem or it gets lost. The nice thing about D&S is that you can see everything on line. If you want to know whether they have received the bills all you need do is call them or check their website. I believe some other factors have websites where you can check on your bills, whether they have been received or funded.

[gottaroll]

lately, I've factored very little. I've only used D&S, they are pretty good at taking care of any problems I've had with their service. When looking back over my history with factoring I was more than a little concerned over how much money I was wasting. I now use their credit check service routinely, I only factor those who take over 30 days to pay.

[GMAN]

It is best to factor as little as possible. If you put money aside as you go along, it should not be too long before you can operate on you own money. That 5% really mounts up over time.

[no_worries]

It just seems to me that 5% for a non-recourse factor would be pretty cheap...

I'm not sure I'd consider that cheap. 5% roughly equates to a loan with an APR of 60%. That's getting into the realm of loan shark numbers :shock:

[Joymax_Trans2]

GMAN, I never ran a load without contacting D&S Factors first. If they would not approve the Broker then I'd pass on the load. The problem is when the Broker pays the line-haul and shorts D&S Factors on the accessorial charges, such as detention or lumper fee (which we stopped dealing with in early 2006). Eventhough, D&S Factors had the revised rate confirmation sheet that included detention and confirmed with the Broker, D&S Factors would short us from a future load and not tell us.

Two weeks ago, there was a problem with their computer software and direct deposit and they did not tell us anything. I found out after a few days when I checked my online bank statement and noticed that the deposits were not there that should have been there. When I checked with their system online, it showed the loads were processed. No one at D&S Factors contacted us. This is no way to do business.

D&S Factors reply was we don't have time to call people we are too busy. I guess I have plenty of time to constantly call them - like I have nothing else to do. I could never get the accounting dept, I would leave a message and I would either get a call back 3 to 4 hours later or no return call at all. After the first few times these kinds of things started happening, I began to cut back using their service.

Now they are holding my original BOLs hostage that have not been funded so I can't bill the Brokers directly and wait for payment. Most of these Brokers require the original and some I can just fax a copy of the BOL. They will not send release letters to the brokers that owe them money so that I can continue to do business with these brokers until all of the outstanding invoices from every Broker has paid them.

So now I am limited to running loads for 3 Brokers that I have never used D&S Factors with. They've basically have cornered us into a spot where I will have to find new Brokers to work with until they have had all outstanding invoices paid. The 3 Brokers have outbound freight but rarely have inbound freight.

[Bandit102]

Apex has never, never, ever done anything like that to us. Any time there is any sort of a glitch, our account rep, Brandy, calls us immediately. I don't factor because I don't have operating capitol. I pay a very very low rate. I credit check EVERYONE and if they aren't near gold, I don't haul for them. Apex has been a real blessing to us.

[Joymax_Trans2]

Today I discovered something about factoring that I did not realize when deciding to use them to factor some of my bills. D&S Factors and most other factoring companies put a freight lien on all of your bills even the ones that you have never factored before. The lien is only released when all invoices from every broker are paid in full.

Brokers that I am working with that I have never factored with D & S Factors, technically have a freight lien on them. D & S Factors is not aware of these Brokers so I can still run loads for these Brokers and bill them directly and receive payment from them. But, if D & S Factors finds out they can prevent us from getting paid until all outstanding frieght bills from every broker we've ever dealt with shows a zero invoice balance with D & S. We currently have $3,000 that we cannot get paid on eventhough the $3,000 does not involve Brokers with outstanding balances.

The only way around this is to factor to another company to get the funds released or stop operating until all invoices for D & S Factors have zero invoice amounts. Understand this does not have to do with having or not having money in the bank. We can not even pull frieght for any new Brokers because if D & S Factors discovers this, a freight lien can be implied.

So I guess I will have to shut down until all of the invoices are zeroed out before I can put my truck back on the road. It could take 60 days or more for this to happen.

[DD60]

Today I discovered something about factoring that I did not realize when deciding to use them to factor some of my bills. D&S Factors and most other factoring companies put a freight lien on all of your bills even the ones that you have never factored before. The lien is only released when all invoices from every broker are paid in full.

Brokers that I am working with that I have never factored with D & S Factors, technically have a freight lien on them. D & S Factors is not aware of these Brokers so I can still run loads for these Brokers and bill them directly and receive payment from them. But, if D & S Factors finds out they can prevent us from getting paid until all outstanding frieght bills from every broker we've ever dealt with shows a zero invoice balance with D & S. We currently have $3,000 that we cannot get paid on eventhough the $3,000 does not involve Brokers with outstanding balances.

The only way around this is to factor to another company to get the funds released or stop operating until all invoices for D & S Factors have zero invoice amounts. Understand this does not have to do with having or not having money in the bank. We can not even pull frieght for any new Brokers because if D & S Factors discovers this, a freight lien can be implied.

So I guess I will have to shut down until all of the invoices are zeroed out before I can put my truck back on the road. It could take 60 days or more for this to happen.

Isn't D and S a nonrecourse factor?

[GMAN]

Yes, DD60, D & S is non-recourse.

[no_worries]

That fine print can be a booger :sad: