There was an interesting sentence in that section. I thought that factors shouldered the non-payment risk but article seems to imply that non-payment would come back and bite the truckers
Yeah, I had to heavily edit the piece to ensure that it wasn't a mini-novella.
So, for more context on factoring, there are two types - recourse and non-recourse. Recourse factoring means that the factoring company can come back and ask the driver for their money back. Generally, the rates for recourse factoring are lower (by 20-50 basis points only because the default rate in drivers is quite high).
Non-recourse factoring is something that the industry is transitioning to. Most of the startups offering factoring today are doing non-recourse. The problem with that approach is that fraud rates rise exponentially. Not too sure how the landscape will look even 6 months from now as easy capital goes away.
So, for more context on factoring, there are two types - recourse and non-recourse. Recourse factoring means that the factoring company can come back and ask the driver for their money back. Generally, the rates for recourse factoring are lower (by 20-50 basis points only because the default rate in drivers is quite high).
Non-recourse factoring is something that the industry is transitioning to. Most of the startups offering factoring today are doing non-recourse. The problem with that approach is that fraud rates rise exponentially. Not too sure how the landscape will look even 6 months from now as easy capital goes away.