Thursday, March 26, 2009

The Right Way to do Business vs the Wrong Way

The trucking company that Jean and Char own has been involved over the years with what are called Factor Companies. One of the problems with a trucking company is cash flow. When a load is hauled an invoice is sent to the broker or shipper and if you are fortunate you will be paid within 45 days of the invoice. If you have a large reserve, this is not a problem, but for small struggling outfits it can mean the end of your company. So, a group of folks with a big pot of money will buy your receipts from you for a percentage discount. The amount varies, often in line with the gross amount that you factor. The first factoring company that the ladies signed up with, on their banker's recommendation, were out and out thieves. They screwed the trucking company out of $14,000 over a period of a couple of years. Not an awful lot, but for a struggling company it meant the difference between a profit and a loss.

About a year ago they moved to a different company and the difference was as different as night and day. The new company's factor fee was less and it was easier to get your funds and make funds available for fuel for the trucks. But, after a year or so, they became harder to work with and their fees were a hardship on the truckers and the trucking company. So some searching led to the discovery of a new factoring company in a neighboring community. When the old factor company heard that we were leaving they refused to let us go by refusing to sign a release form and cutting us out of the web site we used to get funds, both actions a clear violation for our contract with them. We had to threaten a lawsuit before they honored the contract.

Today Jean and I went to see our new factor company and to sell our first loads to them. We handed the the invoice and they said, "If you can wait a bit we will have your check for you. While you are waiting you can join us for lunch." So we had lunch and walked out with a check. Their percentage is lower and the fees they charge for various services are also lower. Plus the truckers can sent their paper work directly to the Factor company and they are funded within a couple of hours. The process they use is much simpler and quicker than the others, so we feel we have found the right factoring company. They know how to treat their customers.

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