Profile For Danny B.

I'm not here to tell you there is only one way to do things because the reality of this industry is that there are a number of ways to have success and every business has it's own needs. Here's the thing.. if someone truly has enough capital to wait out net 30 pay terms, by all means it is not worth them getting with a factoring company. Same thing for an owner operator who has been in business long enough to build relationships with shippers and starts hauling for shippers directly. Often times when this is the case you get paid on a weekly basis (guessing that might be what you have going on?) and again, factoring wouldn't be of much value. Where it really does come into play is helping new owner operators who are starting out under their own authority. By setting up with a good factoring company it gives O/O's access to instant credit checks giving peace of mind that whoever they haul for is in good financial standing and pays out every time, helps them to get paid out higher and diversify who they haul for as well by giving them the freedom to always negotiate how much they get paid instead of how fast, gets them paid faster than quick pay with same day or even 1 hour advances (depending on the factoring company), and takes the accounts receivable headache off their plate so once they submit the invoice the billing and collection is taken care of for them. In addition to this, good factoring companies usually offer a lot of other additional benefits like fuel and tire discounts, dispatch, business loans, and ELD discounts. You are right about factoring companies filing a UCC and always being made whole. That is why they have systems to make sure who O/O's haul for are always paying out. Anyways, just my thoughts! Factoring is not for everyone but it definitely has benefits for the right O/O's

Danny, factoring companies are nothing more than glorified payday loan sharks. Notice the 100 pages of legal papers you have to sign to get started?

They will also want to be listed as #1 beneficiary under any truck loans in case of the shipper not paying.

Some people use them because they find their services useful. Also, this is the year 2020. If someone says they take longer than a week to pay, than I'm not pulling for them. Plain and simple.

No worries! Misunderstanding on my part. Just saw someone posting about being an O/O and there is so much that goes into it. Thank you!

There are benefits to being an O/O and benefits to being a company driver as well. There is no one right way to do it!

Danny, you're obviously new in here, and it seems you don't really understand our purpose here. We empathize, encourage and inspire new drivers coming into the industry. Teaching them that there are benefits to being an O/O fits nowhere in our stated purpose. In fact it's contrary to what we teach. We pretty much believe there is one way to do it, and we labor vigorously to inspire people to understand that. Teaching them to use factoring is just one more misconception that we don't need promoted here.

I know you think you're something of an expert at this, but there are plenty of other places you can share your knowledge. We are glad you're here, but we really don't need you educating us about the economics of trucking. Stick with the basics and you'll find yourself very welcome here.

I'm very familiar with being an O/O, what it takes, and factoring. You are definitely right about the net 30 pay terms and how factoring works, although there may be a disconnect on how it benefits O/O's. One of the biggest benefits to factoring is that it helps O/O's get paid higher for the loads they haul. When going through brokers and debtors, what they are really looking for is one of two things: 1. if you are going to be negotiating the days to pay (aka taking quickpay directly from the broker/debtor) or 2. if you are going to be negotiating the load value. Obviously they have a competing interest. The broker/debtor wants to move that load for as low as an O/O will move it for and the O/O wants to move it for as high as he can move it for. When carriers don't have a factoring company, the reality is often times they will opt for quickpay. By doing this, the negotiating power for the load value goes out the window and it can be dropped anywhere from 10-20% right off the bat! By having a factoring company it allows an O/O to only focus on negotiating how much they get paid instead of how fast they get paid keeping load values high on the front end. Then when they drop off and submit the load they can get paid same day. So more up front, and you receive it faster on the back end. Then, the factoring company does all billing and collecting for the O/O and keeps the invoice history. When you talk about factoring companies only approving certain debtors and brokers you are absolutely right. They will have a form of a credit check system to make sure whatever brokers/debtors the O/O hauls for are in good financial standing and that they pay out every time so the O/O can haul with confidence knowing they will never haul a load and take a loss on it. This is a major benefit, not a deficit of working with a factoring company. Especially being under your own authority there is a great deal of value in having a credit check system to make sure you always get paid for the loads you haul.

There are benefits to being an O/O and benefits to being a company driver as well. There is no one right way to do it!

Another thing not mentioned in the article: FLOAT.

As in - most accounts-payable are "Net 30", and the time and expense that comes with having to CHASE YOUR MONEY.

Many O/O's choose to use "factors" - that is, people who will essentially pay off your BOL's, for a 10% fee. Usually only from "approved brokers or shippers". There's also CHARGEBACKS, BOL's that end up NOT PAYING - which results in your factor taking the $$ they advanced you BACK. Most factors will require you to be EXCLUSIVE TO THEM (no "multiple factoring companies") which means you can only take loads that THEY APPROVE (which are loads they have a high confidence will ACTUALLY PAY THEM). So knock another 10% of that gross revenue fee. It's a VICIOUS WORLD out there - between competition, shady brokers. And if you think you get used/abused by shippers as a company driver for a major company - O/O's end up even lower on the totem pole.

Also find the $1.85CPM from brokered loads might be a "little high". Spot rates from brokers are running a bunch lower now (haven't been on the load/brokerage boards in awhile). A lot of the rates are dependent on location. And many "slow lanes" are significantly less. You will NOT SEE $1.85 coming out of S. Florida - and many folks won't even come INTO S.Fla without a rate over $2.00 - so they can just turn around and deadhead out.

As far as a "rookie", just buying a setup and jumping in - most insurers will only insurer a "new guy" with INTRASTATE insurance for year one - which means NO OTR. Even that was incredibly expensive (upwards of $15K).

I did EXTENSIVE RESEARCH a few years ago at the possibility of purchasing a setup and getting on the road as an independent. Even with FULL CAPITALIZATION (as in $200K liquid) and a business plan approved my my accountant and attorney - the risk to reward ratio just DIDN'T JUSTIFY THE EXPENSE.

It's called: BUYING A JOB - and not a good paying one. The "return on investment" was so low, I would be better off putting my $$ in a CD or money market account...

For every GOOD REASON someone thinks they want to go O/O, there are THREE that say you shouldn't. Not to say that there aren't O/O's that aren't making a decent living (and I know a few) - but these are SEASONED VETERANS, not newcomers.

Rick

Worth the higher load values, flatbed carriers are doing well right now!

Tarpin in the freezing wind is like ****!n in the freezin wind

In addition to what you are looking into, there are a number of companies that can help with your billing, collections, and keeping record of your invoicing history as well. Factoring companies provide this service and the good ones even track your invoices in live time, so you always know what is going on with your companies finances

Just became an owner-operator with my dad. We are curious as to how everyone keeps track of their costs/ revenue? Considering buying an online subscription for QuickBooks-advanced. Any advice/ feedback for this option? Does anyone have it or have any good recommendations?