Factoring math...let's not make it convoluted.

I listened to KR show from last Friday. I like his shows but it does not mean I agree to everything he says.
An argument about factoring cost started when a caller called and wanted KR explain to him what he meant by saying that factoring costs was over 100% per year, since it is 2% per invoice.
He was rather condescending to the caller. He tried to explain to him time value and borrowing money at 2% for a short period of time - a week in their example - would amount to 104% per year. So he goes on and tell him that if this is such a good deal then he will lend him $260 000 for a week after which he wants it back with 2% on the top of it...
Is that right explanation why factoring is a bad business practice?
I don't think so.

1. For starters, the math is simple. If you factor every invoice at 2% and your total revenue is $200 000.00 per year then the obvious factoring cost is $4000.00 for that year no more, no less.
There could be some fees for money handling but that's not the point.

2. Factoring does not need to be looked at as a money borrowing practice. It should not be either. Nobody borrows money here like they do from a loan shark (as implied on the show) that needs to be returned after a month with outrageous interests.
Here you sell your invoices at a price determined by a percentage of their nominal value.

3. While I agree with the general sentiment that factoring is best to be avoided but there are certain aspect of it that it could make it a useful tool.
Example (a)
I am set up with a factoring (truckstop.com) but have never used it yet. It was not about lack of funds either.
I keep it just in case I happen to haul a load for a broker that I may not trust too much with on time payments or that they might have some ill conceived thoughts that they could extra delay payments to me as I am a small carrier vs factoring company.
It was important for me to find a factoring that I could put an the back burner and use it when I please, instead of being contractually obligated to factor everything.
Example (b)
Fleets with more than a few trucks might use it in order stay solvent. With direct customers, the payments might exceed 30 or even 60 days, so factoring, provided that they maximum payment waiting period is long enough, could be helpful.

 

1. I don't understand the statement.

2. 2% was an example used on the show.
My own set up with tructstop.com is at 2.99%.

 

So the disconnect is in seeing it as a money borrowing and on continuous basis for that matter.
What if someone factors a few invoices that amount to $10k out of the entire $200 000 revenue?