Factoring with eCapital - Thoughts and experiences?

I've been using them for over three years and happy with them. On the other hand, two people I've referred to them have had negative experiences. In my totally un-expert opinion, I think in both cases, eCapital's program was just not a fit for their businesses, and that led to the trouble they had. If you've done business with them before, you will probably be fine this time. Just mind the fees.

Their fuel card isn't such a great deal anymore. The deep discounts at TA/Petro disappeared Mar 2013. Between a pitiful 3¢ discount off cash price at TA/Petro, Wilco, and Sapp, and the wire fee to put money on it, it's a bad deal. Use funding to the bank and get on a good fuel program. I'm using NASTC. Between the better discounts and eCapital fees not being paid, I'm saving about $500/mo on two trucks.

Getting paid in a predictable, prompt fashion is a nice benefit, but more important to me is hands-off invoicing and collections. eCapital is my part time AR department. Early on that is exactly what I demanded from them. Now this next part, don't take it as factoring hate or trying to hurt your feelings for even posting this. I'm a fan of factoring, and eCapital too.

If I were you, I'd be looking deeper into why you're having a cash flow crunch. My point being that if you're headed into bankruptcy for some reason, factoring will just make that happen faster. Be honest with yourself and figure out if it's a temporary thing that you are already turning around, or is there more to it? Maybe some unscheduled major repairs that put a pinch on your available funds? A truck that suddenly started consuming too much fuel due to a CAC leak, or worse fuel theft, and you didn't notice the fuel bill going sky high? Or is it just a general trend of your costs creeping up while revenue is flat? Or revenue sinking due to some drivers taking time off or repair downtime? Seriously, I've been there a time or three. Suddenly the money is just vanishing and it takes a deep look at the books to figure out where.

I guess my point is: look past a band-aid solution at the big picture. Make sure factoring is going to be a fit in your business and not accelerate another problem.

 

I'm one of Red's refferel's that has had extremely negative experiences with eCapital. I take responsibility for some mistakes I made in my relationship with eCapital. However, I want you to be aware of what can happen and what they are capable of when things don't go so well.

It got to the point where I was sending in invoices, and not only were they not being funded. Noone could tell me if they even had them ! I had no clue if they were planning to return them, if they were billing my customers. The phone staff there did everything possible to avoid answering my questions. I was told someone would be calling me back and noone ever did. This went on for months, eventually they admitted they were collecting from my customers, and eventually they put that money back in my reserves. Exactly the opposite of factoring, I could have recieved my money much sooner by billing my customers directly. There is still one payment they are holding despite the fact we verified has been paid and cashed over two months ago.

In a recent phone call, I asked if this was common with eCapital and was told that it was. I'm just fortunate that the bulk of these problems happened around the time I sold some equipment and had a little money in the bank or eCapital would have surely bankrupted my company.

 

To be honest, Danny's story is baffling to me. Not that it happened. I have no doubt about Danny's story. I'd tend to trust and believe him over anything that eCapital might say. He's got nothing to gain by lying about it. But the total inconsistency between my experience and others. I actually meant to bring it up and forgot when we were talking the other day LOL. I've even asked eCapital about that and got the expected non-answers. Of course they will not share confidential business regarding another client, so I was not surprised. So, bad as they may be, they do respect client confidentiality at least.

So there is that. I wasn't going to bring up details and be a gossip. But there you have it straight from the source. Honestly, it could happen with any factoring company. Something snaps in the relationship and suddenly your cash flow stops. If you're already running on a short lead time on fuel and payroll, it could be a business ender. They own those key accounts of yours and those customers of yours cannot pay you directly until the assignment is released. Assuming a negative cause, the factoring company has zero incentive to resolve things promptly.

From the bad stories I've followed here and elsewhere, these things are usually started with some sort of big claim usually involving cargo insurance coverage being denied for some reason. Once that happens, the factoring company locks it down to collect everything they can before the claim rolls back on them (uncollectible receivables). That wasn't the case with Danny. Just mentioning my own observations.

 

Just curious how anyone who quit factoring unraveled the agreement. The way I read it, you pretty much can't get paid from anyone you currently factor until all your factored invoices are paid and they give you a release. Could take up to 60 days to undo the agreement.

 

theres a girl that used to work there, she left to another factoring company in FLA and is a friend of mine. She really goes out of her way to help her customers.
I have seldom heard anything good about FC or what ever they are called now

 

An interesting topic. I haven't really seen the how-to from anyone who ended a factoring agreement under good terms. Usually it's either getting another one to buy out the account from the former, or going out of business. In both of those cases, it seems the relationship has ended on bad terms and the carrier has zero leverage to negotiate a more favorable ending.

I suppose in a more positive case, like just deciding one day you don't need that service any more, you would negotiate a transition away from them. Both with respect to the receivable accounts affected, as well as fees for doing the releases, collections, and whatnot.

Being somewhat familiar with the madness and methods, the first suggestion I would have would be the transitional step of moving to non-factoring collections. Where the assignment still exists and they do invoice and collect from your customers, but no advance to the carrier occurs. Possibly even on an account by account basis to minimize the impact to cash flow. That would keep the carrier whole, while settling outstanding advances over a 30-60 day period, longer if not done all at once.

It would add some days to getting paid, as I believe the method would be to take the entire payment to the reserve account, which is typically released monthly. So they aren't doing it for free. Even though no factoring fee would be collected, they would benefit by holding your money for the partial month between when payment comes in and the end of the month when those funds are released to you.

That is, assuming everything is in good standing and there are no billing disputes or cargo claims in play. Once the financial investment of the factoring company goes away, it seems it would be a less messy thing to unravel.

 

Once you have backed out of a contract, any non-factored payment received by the factoring company SHOULD be either forwarded on to you or returned to the debtor with notice to send payment to you. The factor can't hold payment on a non-factored invoice to make themselves whole on a factored one. We actually received a payment yesterday for a client that we haven't worked with in over 2 years. We returned it to the debtor with a release notice that we have kept on file

 

well, I can tell you that for me I am fortunate because I am currently doing almost all direct customer loads on accounts not owned by eCapital. They did send me a general release which I would be THRILLED to sign and return to them. However, the release clearly releases any liability and they have $1550 owed to me. I have the check number from the customer, they admitted over the phone they have it. But the exact words were that I needed to speak with "person X" who was in the department that moves the money around. I'm not joking. And of course that person wasn't in.

BTW, this $1550 is for a load I delivered 3/18/14. I was never notified that anything had changed, I sent in the invoice with others expecting 90% within a few days. Each of about 7 invoices I have had to call, wait on hold, get the runaround. Go to the customer, get proof of payment, etc... til they begrudgingly send the ACH.

I was naive when I started factoring that for the obscene amount of money they were making off of me, that it was a "service". It's not a service, they have a ridiculous stranglehold on your business any time they care to exercise that power. All I can say is please, please, please do not factor, and especially with evilCapital.

That being said, I have two friends, Red being one who have been factoring with them for years with no major issues. But even to them, I say get out. Do you really want to be in business with them knowing what they are capable of ? Besides we are talking over 10% of your net, maybe up to 20% depending on your margins to factor, for a 15-30 day loan in most cases ? it's insane.

 

Factory is like legalise loansharking don't do it at all cost. Once they have you it is difficult to get out.