Igor Galanter
Well-Known Member
20
Factoring companies
- Thread starter Manitoba Moose
- Start date
30
Factoring isn't necessarily more expensive if the carrier passes the cost on to his/her customer. I work with some carriers who have been in business for years and factor everything... they simply build the cost of factoring into the rate. It does make sense: if your days to pay are 30 to 60 days then I'm going to mark up the rate to reflect that fact.
30
Funny afternoon call from a factoring company (not one of the good ones):
Factor: I'm calling about order #...
Me: Oh, so you need accounts payable.
Factor: No, I'm calling to ask about the order itself.
Me: Ok, how can I help you?
Factor: Who is (names the importer of record) and what do they have to do with this order?
Me: Your client is (carrier name), correct?
Factor: yes.
Me: This order is for $550 and doesn't deliver until Monday
Factor: Thank you.
Me: Have a great weekend
Maybe I've had too much caffeine today...
Mike
Factor: I'm calling about order #...
Me: Oh, so you need accounts payable.
Factor: No, I'm calling to ask about the order itself.
Me: Ok, how can I help you?
Factor: Who is (names the importer of record) and what do they have to do with this order?
Me: Your client is (carrier name), correct?
Factor: yes.
Me: This order is for $550 and doesn't deliver until Monday
Factor: Thank you.
Me: Have a great weekend
Maybe I've had too much caffeine today...
Mike
30
To answer Manitoba Moose's question, our company has also chosen to pay carriers directly and ignore the factoring companies, and we did so because of credit reporting.
We found that a certain factoring company was reporting us as paying late on our credit file, but when we looked a little closer we realized that we were only late paying because of the way the invoicing went.
The carrier would deliver the load and produce the paperwork and send that to the factoring company, who would then put their stamp on it and mail it to me. Problem was, it took so long for this process to unfold that, by the time we received their invoice it was already past due in their opinion. We pay based on when we receive the invoice, and they were slow in getting the invoices to us, hence the 'late' payments. This happened several times before we noticed it.
When we found out I contacted the factoring company and they proceeded to tell me over and over again that it was not them that made these reports to Equifax. Long story short is, I contacted Equifax and they gave me the name of the company reporting on us, it was the factoring company who lied through their teeth about not reporting.
That was when we stopped paying factoring companies.
We found that a certain factoring company was reporting us as paying late on our credit file, but when we looked a little closer we realized that we were only late paying because of the way the invoicing went.
The carrier would deliver the load and produce the paperwork and send that to the factoring company, who would then put their stamp on it and mail it to me. Problem was, it took so long for this process to unfold that, by the time we received their invoice it was already past due in their opinion. We pay based on when we receive the invoice, and they were slow in getting the invoices to us, hence the 'late' payments. This happened several times before we noticed it.
When we found out I contacted the factoring company and they proceeded to tell me over and over again that it was not them that made these reports to Equifax. Long story short is, I contacted Equifax and they gave me the name of the company reporting on us, it was the factoring company who lied through their teeth about not reporting.
That was when we stopped paying factoring companies.
10
So there is Liquid Capital and ZZ in this thread? Ive seen many others also. Many of the Factorers in Toronto seem to be owned by the same people?
10
I read on another thread that someone suggested 1 of the factoring companies might be under investigation. Is this accurate? There are some factoring companies in Montreal also. I agree that the prices they charge are very high and leave little, if anything , for their clients. I was told once that the factoring companies must constantly get new clients as 64 percent of their clients close within 14 months of dealing with them. I ve seen several times also that the factoring companies get back into business with the same clients but using a different transportation name.
30
While I don't use the services of factoring companies, many of the carriers we partner with do. With a few exceptions, our relationship with these factoring companies has been nothing out of the ordinary. They usually respond promptly and professionally to any requests we make and we haven't experienced any incorrect credit reporting on their part. Factoring companies have been around in the transportation industry for as long as I can remember, although there does seem to be more of them and it appears more carriers are using their services. I certainly don't have any personal interest in defending them, but at the same time, I'm having a problem with some of the posts painting the factoring companies as some sort of Devils, preying on poor, struggling carriers. If factoring your invoices seems to be a prudent business decision, then do so. If it doesn't help your company, then don't.
30
I'm with Loaders and Johnny on this topic.
I hear more often than not:
Carrier sends invoice and POD to factor on the day of delivery (they get cash pretty quick). Factor dilly dallies, cuts us an invoice with the SHIP DATE as the invoice date, only we receive it a month after delivery. They count days from ship date, not date of receipt. Often enough the CARRIER calls us and asks why we haven't paid their factor in a timely fashion. We then forward a copy of the cashed cheque to the carrier proving it was cashed weeks ago.
Not all factors do this, but the shady ones certainly do. They bill their clients for 'the length of time' that the funds are factored. If they wait 3 weeks to send us an invoice and then blatantly lie (for another 3 weeks) about the day they receive payment it's a great way to charge the customer more, 6 weeks of interest that their customer should not have to pay adds up!!
Again, if you NEED a factor, go with IPS, they don't play games, they know they are an important piece of the pie, they treat customers fairly and treat customers customers like gold because we all need each other to make a 'fair' profit for our piece of the puzzle.
Keep well,
Mike
I hear more often than not:
Carrier sends invoice and POD to factor on the day of delivery (they get cash pretty quick). Factor dilly dallies, cuts us an invoice with the SHIP DATE as the invoice date, only we receive it a month after delivery. They count days from ship date, not date of receipt. Often enough the CARRIER calls us and asks why we haven't paid their factor in a timely fashion. We then forward a copy of the cashed cheque to the carrier proving it was cashed weeks ago.
Not all factors do this, but the shady ones certainly do. They bill their clients for 'the length of time' that the funds are factored. If they wait 3 weeks to send us an invoice and then blatantly lie (for another 3 weeks) about the day they receive payment it's a great way to charge the customer more, 6 weeks of interest that their customer should not have to pay adds up!!
Again, if you NEED a factor, go with IPS, they don't play games, they know they are an important piece of the pie, they treat customers fairly and treat customers customers like gold because we all need each other to make a 'fair' profit for our piece of the puzzle.
Keep well,
Mike
30
To avoid that scenario I suggest that my carriers send me their invoices directly, and if they want me to pay a factoring company they put that factoring company's name on the invoice as well. That way the factoring company can't play games, and it saves time... often the carrier mails his invoice to the factoring company (5 to 10 days) and then the factoring company mails me the invoice (another 5 to 10 days) and all these days end having a derogatory effect on my credit. I also save all envelopes showing postmarks. Some places only mail once or twice a month, and that, again, slows things up and ends up reflecting in my days to pay. Over the years I've successfully sued people who inaccurately report my days to pay. Now most know better than to mess with me and my pit-bull lawyer.
