Freight capital not paying...

Well next time before you book a load let them aprove it, and by the way tell your boss to get out of that contract, it will suck him down to the bottom..most paying brokers do quick pay too @ rate of 1.5% to 5%

 

A note on Factoring companies, Most if not all have a No Haul list.. that is They wont factor loads for companies that do not pay their Bills. Even Non-Recourse accounts.. As an Example XYZ company is on verge of Bankruptcy and You are Willing to carry their cargo, Why would a Factoring company Pay you for that Risk?. Even Non-Recourse accounts have limitations, as does your Insurance (Driver Theft of Cargo) What you are paying for is the unforeseen risk, Not the Known risk...

 

As far as being presented with an Invoice.. How many do you want?. There has to be
1. a valid transaction with an approved (Good credit Standing) Customer.
2. Verification of transaction ( Copies of B.O.L.)
Before funding will usually take place..

Hardworker is correct that Many of the Big and Reputable Brokers do have a Discounted Quick payment plan.. Hopefully you dont have to carry much Broker freight Because They take More $ than factoring Fees off the top...

 

Now that you've heard about the evils of factoring, here's some things about Freight Capital you may not have known. I understand your relationship with your boss and unsure of how much you are directly involved in the factoring stuff, versus just hearing it from him. Since I am the boss and have managed this relationship since day 1, here is my first hand perspective.

I went into business with them almost two years ago with the same expectations you seem to have. A couple of really minor hiccups on our second load ever got me educated really fast, and fortunately only for a total of $60 (short two cases of product). Since that learning moment, I've had no further problems with them. In fact, I have been very satisfied with their level of service. I have even hauled many more loads for that particular customer (trouble-free) after cussing them for days about that incident. So here I will share the benefits I gained from days of phone calls and stressing over how things would work out. The details are specific to Freight Capital, but generally will apply to any factoring company.

Non-recourse doesn't mean you're off the hook once you send in the invoice. It's still your customer. So what exactly does that mean?

You, the carrier, continue to have a part in the collection process. Ultimately you are still responsible for the payable until it is fully paid, no matter what you think. Non-recourse reduces that responsibility a tiny bit, but it is not total relief. That is, you are not tossing an invoice to them and making it their problem entirely. You are the only other party that knows what really happened on a load. Freight Capital has hourly admins doing collections. They don't know squat about what really goes on with these loads. They just make calls and process paperwork. If an invoice starts going over 50 days, you better make a call to both Freight Capital and the customer to find out if there's a problem and what you possibly can do to move it along. Communication is key to CYA in the event it doesn't work out favorably. Additionally, I ask my better customers from time to time how Freight Capital is treating them just to make sure there isn't any abusive calls or whatnot going on. In nearly two years, I've had to get involved in about a dozen difficult collections. In every case, I've engaged Freight Capital as if they were bankers (which they are) and they've been on point with doing their part.

Also, the terms for an unpaid invoice not to bounce back on the carrier are pretty narrow with respect to financial insolvency of the payor. If there's anything else contributing to the non-payment (claim, accessorials, late delivery, and so on) it's back to the carrier. Another really good reason to stay involved in the collection. If you have a 50 day old invoice going sideways, that might be a good reason not to pre-plan five more loads with that customer.

Now a sidetrack about doing a lot of business with one customer, while factoring or not. If you have a major claim, they are likely to withhold payment on any and all outstanding invoices. Think about that a minute. That means you're gonna be jammed up on a ton of money pending the outcome of that claim. If you're direct billing that's a risk for sure. If you're factoring, now you've stepped it up a notch since they're involved too, and own more of your invoices with other customers. What do you think they will be doing to protect their investment? Let's just say the factoring cash flow on everything will end until you've settled the matter.

Another detail is that the non-recourse terms depend on a credit check on their system. It's their approval mechanism to protect both them and you. Without running that check, they basically have the option to collect but not guarantee, or just outright reject the invoice from the get-go. The check is easy and takes only a minute. Your boss should create a login for you on their portal. He doesn't have to give you access to everything. In fact, leaving all the permissions unchecked still gives you access to credit checks, daily fuel discounts, and several other resources. But you can't just do the credit check once. Do one with every load, or you can get approval for multiples if you're pre-planning. I'll admit to being lazy with that on my best, regular customers but I really need to get back on point with those.

Bottom line is: if you didn't get the credit approval, the terms swing heavily away from your favor if a collection goes bad.

Now there's two types of approval on their system. "Approved" means the non-recourse terms are in effect. Some brokers and shippers that they have little exposure to, may be new in business, or possibly had payment issues in the past will return "Approved with Recourse." That means they'll accept and fund the invoice, but only as full recourse. So you do your homework before you accept that load. Sometimes I'll base my decision on the TransCore credit profile off members edge. Sometimes I'll Google them. If that doesn't satisfy me and I have time for it, I have just called Freight Capital and asked them. If I get the feeling they might be sketchy I just say no and look for something else to load.

A bit of Freight Capital credit approval trivia: their credit system measures against three databases. First is their own experience with that customer. Second is a collections database fed by factoring companies. It's well known in the industry that when otherwise good payees get an invoice with a factoring assignment, their check writing hand slows down. So the factors like to know how slow. Third is commercial sources like TransCore and D&B that include all payables.

"Approved with Recourse" isn't an indictment of a potential customer. It means you're taking more risk and need to CYA before accepting. I have had two or three that go through with recourse that I've never had a problem with. I've also had trouble free payments from a few of those that are now either out of business or at least appear on a weekly collections bulletin most of us get. So I may have dodged a bullet in those cases. Since I'm regional and those recourse approvals are usually one-load deals, my risk on them was pretty low in the first place. Take a coast-to-coast run with them or jam out on a bunch of little local loads with them and you might be critically exposed.

With all that in mind, my guess is that you and your boss are either not being diligent with the credit checks, or follow up calls to help collections along, or both. Not saying you're sloppy or bad people. Just saying it's easy to get busy and miss some details. Guilty of it myself at times. If you or your boss have some questions I might be able to help with, you have my number already.

 

AGREED i see no value in using factoring companies now days but i guess i could be missing some points... FC did the same to me when i used them i no longer use them because of poor service and like mentioned most brokers offer quick pay for the same cost
OR LESS.... than FC

 

Freight Capital called me for months I told them i would try them for 90 days. Thay said ok risk free. thay took 5 % and held 5% in savings.
When I left thay kept the 5% in savings I went to a new factoring co. Freight Capital sold them a bill that was fake for $3200
NowI have to pay back the new factoring co.

 

Red, you know that you and I have completely different opinions regarding FC. Can't say they are worse than others but between the lies told during the sales process, the complete lack of support when I used them and the making money on all the little things I can't imagine how these people sleep at night.

Understand the need for factoring but there has got to be an honest, ethical company.

 

I started writing another book to add to this post and got sidetracked with something else that makes money LOL. After some thought it was more than anyone would pay attention to, so I've summarized.

I've read and heard first hand enough different bad experiences with factoring companies to say that half of the problems come from mis-set expectations and not really understanding roles and responsibilities. The latter being a product of the former in most cases. I agree much of that comes from misleading sales pitches and a lack of follow through on the part of the factoring company to educate.

Another small part comes from how carriers use factoring. Some carriers only seek risk avoidance. That is, they will only factor customers that they know are either slow pay or one-time reloads. So now the factoring company is only getting potentially bad business and not much of it to boot. Certainly not the type of business they are going to work very hard to keep. Also notable in this case - when the only business you send them is hard to collect, your level of involvement in the process goes way up as a result. Easy to blame the factoring company for not doing their job, but then when you send them nothing but piles of poop to work with, you kind of invited that.

Should you choose to do it, your factoring business relationship has to be like any other. Factoring is not an ATM or dumping ground for bad customers. If you make it good business for both parties and keep the communication lines open it can be very positive. I've achieved that with Freight Capital and that business relationship continues to improve for me. As i've said before, it's taken some effort on my part and frankly it's not for everyone.