Hard times?

Darlene

Darlene

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Jun 9, 2009
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in today's mail, we received invoices, and 4 of them are from factoring companies .. I don't recall seeing so many at a time. does anyone else get a little "gun shy" when they see this, or am I paranoid? in my mind, I'm thinking these companies are not here for long ? Please correct me if I'm wrong.
 
I always worried about people using Factoring Companies but then realized if that is part of their business plan who am I to argue, the troubling one is the companies that are actually using factoring companies to pay invoices...........tells me they are not to good with money.
 
lowmiler88 said:
I always worried about people using Factoring Companies but then realized if that is part of their business plan who am I to argue, the troubling one is the companies that are actually using factoring companies to pay invoices...........tells me they are not to good with money.
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Some major accounts use companies like CASS to pay, this has nothing to do with being good or bad, they are just using a service to audit the bills/payments and be sure they aren't losing anything. They can also get receivables insurance with them.

We have many carriers who use factoring companies to collect, this insures them some sort of "insurance" in a way and also does some of their homework for them.
 
chica123 said:
I will just never understand how a carrier could afford to pay a Factoring Company when the margin is so tight to begin with. I will never be able to wrap my head around that concept.
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There is a long list of 'types' of carriers that require factoring.

SOME of them are:

Profitable carriers in a niche market (making enough money to afford the services of a factor). These carriers eventually cut the factor loose (when they are financially able to), OR see the value in the service and develop a long term relationship with their supplier as they couldn't be bothered to deal as much with accounting/invoicing matters. I hope that the large majority of carriers who work with factors are in this 'bucket'.

Marginally profitable carrier - just squeaking by, will rely on the factor indefinitely. Sad to see.

Carrier that is profitable by screwing staff, lying, cheating and stealing. These guys end up closing and likely occupy the bulk of the factors resources (staff, time, money, legal fees, etc...).

Entity that is a short term fraudulent business. Bad for everyone and no one knows until it's too late. Costs everyone time, money and grey hair.

Blondie - how's my educated guess?

Keep well,
Mike
 
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G Roch said:
Some major accounts use companies like CASS to pay, this has nothing to do with being good or bad, they are just using a service to audit the bills/payments and be sure they aren't losing anything. They can also get receivables insurance with them.

We have many carriers who use factoring companies to collect, this insures them some sort of "insurance" in a way and also does some of their homework for them.
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I don't consider Cass et al who look after Mutlinationals as factoring companies and I'm pretty sure they would agree, i was more talking about small companies that use the Riviera's etc to pay bills.
 
lowmiler88 said:
I don't consider Cass et al who look after Mutlinationals as factoring companies and I'm pretty sure they would agree, i was more talking about small companies that use the Riviera's etc to pay bills.
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that was an example, there are smaller ones too, we deal with some (from our customers & carriers not for ourselves) I just don't know their names well enough to remember them.

this is similar to carriers accepting a 5% cut to get paid asap, it's their way of doing business.
 
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5% to get quick pay? I do the work i would expect to get paid the full agreed amount and not wait 90 plus days for it. I have worked on both sides of the fence over the years but the one and only thing that I made sure each and every time is that all carriers that I used would be paid in 7 days. this should be the normal in this industry as fuel companies, insurance and maintaince on equipment will not wait 90 plus days. Taking 5% to be paid in what should be a normal time frame is completely carzy and in my opinion should not be tolerated by any means. In saying this i know it happens all the time and will continue to happen.
I am not usually one to rant but it has been a bad morning.
Take care and have a good day
 
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A lot of large shippers use freight audit services like CASS, ITS, Williams and Associates etc to administrate freight payments, though I really wonder if there is much validity to it in this day and age.

Carriers using factoring companies is different. It means they are short on working capital, which could signal expansion, or could mean there's at least one nail in the coffin already. I'm not a fan, but I'm over it.
 
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