There are certain clients that will not deal with you if they know you are dealing with a factoring company. Some of the factoring companies are known to be too aggressive with customers or not follow the payment terms that were originally agreed to. There are some that feel if you have to deal with a factoring company, you are not financially stable.
JD Factors?
- Thread starter trucker8
- Start date
@Henry, I respect that this is how some may feel, based on their own direct experience, but there are counter-arguements to consider:
No doubt, some factors are sometimes too aggressive, but in my experience that's usually when the customer is not respecting payment terms. If you think your factor is too aggressive, you should ask them to tone it down. If it were me and you asked me to buy an invoice with 90-day terms, I'd have lots of questions about the customer's financial strength and why you'd choose to expose yourself to such risk.
Your second point about companies that factor being financially unstable is really hard to accept, though perhaps there is some truth in transport where I've seen gross margins of less than 10%. Factors should be more disciplined in accepting clients...if there is not a strong chance of revenues, margins and profitability will rise, we factors should decline the file, but I admit that most won't.
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all valid points/comments, however, as far as being considered financially unstable, I don't necessarily think that the industry frowns upon carriers who use factors, but you have to bear in mind, it says you are paying yesterday's bills with today's money, so whatever you've bills you incurred today, fuel/wages,etc. are dependant on money that doesn't exist yet.
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In one sense factoring companies have greatly streamlined the entire payment process as most carriers seem to use a handful... D&S, Apex, JD Factors, and Riveriera.. So there's much less screening, and all of my invoices look the same.. number of payments reduced as well as one payment to a factoring company instead of 20 payments to various carriers individually. And I pay nothing for that on my end..
My only beef with some factoring companies is that they sometimes incorrectly report days to pay and sometimes (albeit very rarely) screen me out due to incorrect data.
My only beef with some factoring companies is that they sometimes incorrectly report days to pay and sometimes (albeit very rarely) screen me out due to incorrect data.
My biggest issue with the factoring companies is the emails. Some send weekly or bi-weekly statements. Sometimes there are two employees working on the same file and the emails are often doubled up. All invoices are received and confirmed...please don't send me a reminder email every two days. At least wait until the 21 day mark to look for payment details.
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Not to mention the phone calls after the shipment is complete verifying the rate.
I'm guess that errors in reporting days to pay are fewer now that many/most send bills by email? Not long ago, the practice was for the factor to receive a physical bill, stamp it and then mail it, which introduces several days between the time the invoice was issued and when it was received by the customer. Progress!
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I think part of it is that some factors have a vested interested in not showing that a broker has a good days to pay.. i.e invoice emailed on March 20... payment mailed March 21 .. payment out of the account March 29.. equals 32 days to pay. I get alot of that.. I think they do that because if they report me as a fast paying broker then their clientele would have less of an incentive to use them.. Now, I'm not painting all factors with the same brush.. just a few of them. Some are careful about reporting accurately.
I can't speak for others, but I'd like to think we are not motivated by misrepresenting days to pay. Not sure how you get to 32 days, but maybe that was your point. I love when my clients use fast payers...shows they're making good business decisions.
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I'd like to tip my hat to JD Factors
I received a call today, and usually when a factor calls it's to verify a load amount, no claim, delivered on time, no advances given, etc.. and usually JD does not call much at all compared to some factors.
In this case a red flag went up in their system because the carrier listed on the BOL was not their client. In the end the shipper wrote the carrier name on the BOL that we originally booked on the load and failed to change it to JD's client when the first carrier could not service the order.
She advised that they were concerned about a multiple broker situation and that's why she called me to verify what happened. It's due diligence like this and attention to detail that I appreciate. I thanked her for her efforts. Two thumbs up!
Keep well,
Mike
I received a call today, and usually when a factor calls it's to verify a load amount, no claim, delivered on time, no advances given, etc.. and usually JD does not call much at all compared to some factors.
In this case a red flag went up in their system because the carrier listed on the BOL was not their client. In the end the shipper wrote the carrier name on the BOL that we originally booked on the load and failed to change it to JD's client when the first carrier could not service the order.
She advised that they were concerned about a multiple broker situation and that's why she called me to verify what happened. It's due diligence like this and attention to detail that I appreciate. I thanked her for her efforts. Two thumbs up!
Keep well,
Mike
3% sounds a bit high. If you're in the market for a factor, check this board for references and shop around. Rate is important, but not the only consideration.
@ferrari, not everyone is struggling, but some might be...depending on their source of funds.
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A customer used a factoring company to pay us - Revolution...well they had the incorrect bank account entered even after we sent a VOID cheque - it took two months for someone to figure out the payment bounced back - but was not returned to the customer - so they couldn't decide who would pay us!!!! The customer had paid the factor and the factor had the money but wouldn't fix our account info. .... I would take direct relationship with my customer any da over a factor
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How is everyone liking JD factors? We use them for about 10-15% of our business when we don't want to take on risk but find that they turn down a lot of brokers and seems like as of recently they only want to take the 30-day payers which we don't care for as we don't factor anyone that pays under 45 days,