Why This Argument Never Ends
Go search “factoring” in any trucking group on Facebook. Doesn’t matter which one. What you’ll find looks less like a conversation and more like a street fight. One driver swears it kept his business alive through the freight recession. The driver next to him says it quietly ate his margins for two years before he figured out what was happening. And somewhere in the comments, a third guy says if you need factoring, you were never running your business right to begin with.
None of those people are lying. They just had different experiences — because they ended up with different companies, different contracts, and different levels of understanding about what they were actually getting into.
On a June 2026 episode of The Long Haul podcast, Adam Wingfield sat down with George McWilliams and Ivan Martinez of Summar Financial to stop dancing around the topic and just go there. No sales pitch. No hit piece. Just an honest look at why factoring makes grown operators so emotional.
McWilliams didn’t waste any time getting to the root of it. “Who wants their money controlled by a third party? You’re working, somebody’s hiring you for a service, and here comes this third party in the middle. And at times, there may be an issue and your money gets held or charged back. With very good reason, that can create a lot of turmoil and a lot of dislike toward factoring.”
Sit with that for a second. You ran the load. You delivered on time. You did your job. And now there’s somebody parked between you and your own money — and when that arrangement breaks down, when it’s a Friday at 3:00 and your invoice just went on hold and you need fuel to get home and the phone’s going to voicemail — that doesn’t feel like a business problem. That feels like somebody took something from you.
Every single person in that conversation — Wingfield, McWilliams, Martinez — kept landing on the same thing: is that factoring’s fault, or is that what happens when you pick the wrong company and skip the fine print?
Almost always? The fine print.
The 36% Math — And the Part It Leaves Out
There’s a LinkedIn post from Scott Reiser that gets passed around trucking circles pretty regularly. The math in it is straight: if you pay 3% to get your money 30 days earlier than normal terms, you’re effectively borrowing at 36% per year. His verdict — factoring is a payday loan for trucking companies, nothing more.
The numbers aren’t wrong. But Ivan Martinez pushed back hard on what those numbers don’t include.
“If you’re strictly looking at factoring as only a payday loan, then all you’re looking at is the monetary cost,” Martinez said. “You’re not looking at any of your benefits. Same thing as if you were to go to an amusement park — it’s gonna cost you $50 to get in. But you’re not just paying $50 to get in. There’s all these things added to it.”
Think about what you’re actually buying when you sign up with a legitimate factoring company. Yeah, you get paid faster. But you also get somebody handling your billing. Somebody making the calls when a broker is dragging their feet on payment. Legal support if a broker goes under and owes you money. And in a lot of cases — fuel cards, tire discounts, maintenance deals.
Wingfield put it in plain terms: “I’m hiring an accounts receivable team that’s going to take that work out of my business. It’s just like if you outsource an oil change or go get your haircut. There’s a cost associated with the service.”
If you’re a solo driver who’s up at 10 PM chasing invoices, arguing with a broker over a short pay, and trying to figure out what you can even do about it — maybe 3% is cheap. Depends on your situation. No way around actually running your own numbers on it.
But let’s be real about one thing. Some of that criticism people throw at factoring? It’s earned.
How Some Factoring Companies Burned Carriers and Ruined It for Everyone
Wingfield asked Martinez point blank — has the factoring industry brought some of this reputation on itself?
“100%. Absolutely.”
No soft answer. Just yes.
Here’s the play that does the most damage. A company puts 1% or 1.5% out front. Carrier sees it, thinks it’s a deal, signs up. Then the fees start appearing on statements. A charge for every page you upload when you submit documentation. A fee to receive your own money via ACH. A different fee if you want it wired instead. A documentation handling fee — separate from the per-page one. And then, somewhere near the back of the contract in language nobody reads, a daily charge that kicks in on every invoice sitting past 30 days.
Individually, not one of those fees looks like it matters. But stack them up on a $1,000 invoice and see what happens.
Wingfield did the math live during the episode. “It’s 1% of a thousand bucks — big deal. But if you’re charging me $15 here, $10 here, all of a sudden on that thousand bucks, it’s turned into 7% by the time you factored everything in.”
McWilliams was direct about what he’d do first if a family member handed him a factoring agreement to look over before signing. Not the rate. The fees.
“They’ll give you the 1%, and then for every invoice page, they’ll charge you a fee,” he said. “I’ve seen contracts where to submit your documentation to get paid, there is a fee per page, a fee to receive your payment whether you choose ACH or wire, plus additional fees the factor adds on top of what the bank already charges.”
Not every factoring company runs it this way. But enough of them do — or did — that the carriers they burned remember it forever and make sure everyone in their circle hears about it. That’s where a huge piece of the online rage comes from. Not made-up grudges. Real money that went somewhere it wasn’t supposed to go.
Recourse vs. Nonrecourse — The Part That Nobody Sits Down and Explains
Wingfield asked Martinez what one thing he wishes factoring companies would stop doing. The answer came without hesitation. Not explaining nonrecourse.
This one clause causes more confusion and more arguments than almost anything else in a factoring contract. Here’s what it actually means, in real language.
Recourse factoring means if your broker doesn’t pay — or pays less than what’s on the invoice — the factor comes back to you for whatever’s missing. Say you factored a $1,000 load. They advanced you $800. Broker only paid them $500. That $300 hole gets pulled from your next advance. That’s your money they’re taking back. That’s recourse.
Nonrecourse sounds like the opposite — like the factor takes the loss when a broker doesn’t pay. And sometimes that’s true. But here’s what trips carriers up every single time: nonrecourse doesn’t mean you’re covered no matter what happens.
“If it’s not explained properly, you could be under the impression that no matter what happens, nonrecourse is going to kick in,” Martinez said. “And once I submit my invoice, I’ll never have to worry about that particular invoice again.”
That’s not what it means. Nonrecourse almost always only applies in one specific situation — the broker files for bankruptcy. That’s it. It doesn’t cover a broker who short-paid you because there was damage to the cargo. It doesn’t cover a paperwork dispute on the BOL. It doesn’t cover a delivery disagreement. Those can still come straight back to you even if the word “nonrecourse” is written across the top of your contract.
Martinez spelled it out. “If there’s damage to the cargo, that doesn’t have anything to do with the factoring. It has to do with the actual load itself. So the broker’s gonna deduct $300 of damage — that doesn’t fall under nonrecourse. You’re still gonna be liable for that.”
Before you sign anything, make the rep walk you through exactly when nonrecourse protects you and exactly when it doesn’t. Tell them to give you real examples — specific situations, not general language. If they get vague, keep looking.
But Do You Even Need Factoring? Ask This Before You Do Anything Else.
This is where the episode got really honest. And it came from someone who works at a factoring company.
“If you’re signing up to factor just because you want your money faster and you can afford to pay that percentage with no other reason, then yes, I can see where that negative perception comes from,” Martinez said. “Why do I want to give away a portion of my income? I personally don’t want to do it. The question is — what are your true needs?”
Start right there. Not with rates. Not with what other drivers are doing. What does your business actually need?
If you’ve got enough cash sitting in your account to wait 30 or 45 days on payment without losing sleep over your truck note or your insurance, you might not need a factoring company at all. Before you sign anything, try going to your brokers and asking for faster pay terms. Some will go 15-day net just because you asked — no percentage, no factor, no fees.
But if you’re tight, if you’ve got brokers who somehow always end up on day 44 of a net-30 agreement, and you’re lying awake at night trying to do the math on whether the money’s gonna hit before the note does — then yeah, paying 2% or 3% to make that problem go away might be the right call. It’s not just faster money. It’s being able to keep your head in the job instead of your phone.
“We all have a cost of doing business,” Martinez said. “If factoring has value other than just getting your money upfront, then it is not bloodsucking. It is the cost of your business.”
When Factoring Stops Being a Tool and Starts Being a Habit
Wingfield brought up something toward the end of the conversation that most people in this industry never actually ask themselves out loud: can you get so used to factoring that you’re still doing it long after you stopped needing it?
Martinez said yes. But he made sure to say that’s not always a bad thing.
“Maybe you love the fact that you don’t have to spend $40,000 a year on a back-office person,” he said. “They’re doing it for me already, and I’m paying a fraction of that depending on how large my company is.”
Fair. If it’s working and the cost makes sense, no reason to kill it just to say you did. But Martinez also said every carrier needs to be asking themselves regularly whether it’s still pulling its weight.
“You need to constantly reevaluate your business model. Does this work for me now? And a year from now, does it still work for me?”
Most don’t ask. They sign up when the cash is tight, the automatic deposits become routine, and four years later they’re still running invoices through the factor — even though the bank account has grown, the shipper relationships have settled down, and they could probably handle waiting on payment just fine. It’s just become something they do without thinking about it.
And here’s something else people find out too late: leaving a factoring company isn’t always as easy as just stopping. Most agreements have a 30 to 60-day notice period built in. There are rules for invoices still outstanding when you walk out the door. Some have exit fees. Martinez put it straight: “Make sure you understand how the contract reads so that when you are ready to move out of that factoring relationship, you know the ins and outs of how to finalize that agreement. It’s not a matter of breaking the agreement. It’s a matter of finalizing it.”
Know how you get out before you sign to get in. That’s not being negative. That’s just running a business.
What Actually Separates Carriers Who Make It From the Ones Who Don’t
Wingfield asked both guests — from where you sit, what’s the real difference between a carrier that survives the down markets and one that doesn’t?
Not the lanes they run. Not the size of the fleet. Whether they actually know their numbers.
“Know your expense per mile,” Martinez said. “Anybody that’s hauling — if you don’t know your expense per mile when deciding whether you’re gonna take a load or not, you’re gonna run yourself into trouble.”
That’s the number. That’s the one that tells you, before you commit to a load, whether it’s actually worth taking. Without it you’re guessing. And guessing in a business with margins this tight is how you end up broke doing a job you thought was paying you.
Wingfield said it flat out from coaching carriers over the years: “You can’t improve what you can’t measure. A lot of times you’ll see small fleet owners or owner-operators not measuring their profitability versus loss on a regular basis.”
Martinez also mentioned something he watches for on the factoring side that’s a real tell. A carrier who normally drops invoices every couple of days suddenly goes quiet for two weeks. No submissions. Nothing. Sometimes it’s vacation. More often something broke down — literally or financially. A good factoring partner notices that gap and picks up the phone. A company just processing paperwork doesn’t find out until the carrier is already buried.
“If I don’t know who you are after two or three years,” he said, “that’s on me.”
What Would Actually Happen If Factoring Disappeared Tomorrow
Late in the episode, Wingfield threw out a hypothetical that’s worth sitting with: what if factoring became illegal overnight? Just gone. What happens to trucking?
Martinez didn’t sugarcoat it. “It would fold. The industry would fold for at least six months until brokers and shippers got on the same page on payment terms. Because right now, you can say, well, you don’t need factoring because your broker offers quick pay. But how many brokers are offering quick pay? That number has dwindled in the past decade.”
McWilliams landed in the same place. “Unfortunately, there are so many carriers that need their money upfront. Those expenses don’t stop. The wheels have to turn and there’s fuel and maintenance and tires. I believe the number of carriers that use factoring outnumbers those who do not.”
Both of them, when asked what the ideal system looks like? You haul it, you deliver it, you get paid. Done. No 45-day float. No broker sitting on your money while they wait to collect from their shipper. No percentage coming off the top because the payment system in this industry moves slower than the trucks do.
That system doesn’t exist in trucking right now. Until it does, factoring is filling a gap the industry built — not one carriers asked for.
“It is unfortunate that there is a need for it,” McWilliams said. “But nevertheless, there is a need and there is an issue that needs resolution.”
Three Questions Operators Are Actually Asking
Q: My factoring company put an invoice on hold and nobody’s answering. What do I do right now?
First thing — write it all down. Invoice number, dollar amount, when you submitted it, every call you made and what time. Then hit every contact you have: phone, email, your account rep if you actually have one. If you’ve been with this company for any real length of time and you don’t have a direct rep’s name and number, pay attention to that — it says something about the relationship. Still no answer after 24 hours? Pull the contract out and find the dispute section and the termination language. Read both. The fix for the long run is getting your rep’s direct line on day one — before you ever need it — not scrambling for a name to call at 3:00 on a Friday when your fuel card’s not working and rent’s due Monday morning.
Q: One company is quoting 1.5% and another is quoting 3%. Why would I ever go with the higher rate?
Because that 1.5% might not be 1.5% when you see your actual payment. Ask both companies to send you every fee they charge — not the highlight reel, the whole list. Per-page upload fees, ACH fees, wire fees, document handling charges, daily fees on invoices that age past 30 days. Add all of that up on a load you run regularly and see what the real number is. Then get both of them to explain nonrecourse to you — not the general version, specific situations where it covers you and where it doesn’t. And before you sign with either one, ask for two or three carriers you can actually call — not website testimonials, real people. Someone who’s been with them through a dispute or a hold will tell you more in five minutes than any rate sheet ever will.
Q: I’ve been factoring for three years. How do I know when it’s time to walk away?
Add up every dollar you paid in factoring fees over the last 12 months. The actual dollar amount — not the percentage. Then ask yourself honestly: if your brokers paid on normal 30 to 45-day terms, could you cover everything without missing a payment? Truck note, fuel, insurance, all of it. If yes, and if your brokers are actually reliable about paying, you’ve probably outgrown it. If no, figure out the real reason. Not enough cash cushion built up? Brokers who always stretch past 30 days? Both of those have a specific fix that doesn’t involve factoring forever. And when you are ready to leave, read the contract before you do a single thing. Find the notice period. Find out what happens to invoices still out there. Find out if there’s a fee to exit. Leave when you’re ready, not because you missed something in the fine print two years after you signed it.
The post They Called It a Trap. A Factoring Company Agreed — Then Explained Why You’re Using It Wrong. appeared first on FreightWaves.
