The History of Invoice Factoring (And Factoring’s Growth in the 21st Century)
Invoice factoring has remained much the same since it came into vogue in the Middle Ages. Yep, factoring has been around a long, long time. Invoice factoring has always been a fast, reliable way for businesses to improve cash flow without getting bogged down with debt that has to be repaid. The first recorded use of factoring is said to have been 4,000 years ago, in the kingdom of Hammurabi of Mesopotamia, but let’s take a brief look at its history over the years through today.
CBAC’s infographic (click to view) tells the story of invoice factoring in a nutshell, noting its use by Jewish businessmen in the 1300s and 1400s and later by English merchant bankers advancing funds to colonists settling in America in the 1600s and 1700s. Jumping ahead to the 1910s and 1920s, invoice factoring was popular in the garment and textile industries. In the 1940s, the United States saw a factoring boom in the textile and transportation industries. And in the 1960s, ‘70s, and ‘80s, “rising interest rates and bank regulations made invoice factoring more popular as it did not require the same sort of credit checks.”
The same thing may be happening today, as it’s becoming harder and harder for small businesses to get approved for traditional bank loans and financing. Will we see another boom in invoice factoring for small businesses? Time will tell. The use of invoice factoring has already grown by 15% in the U.S. since 2004. As businesses become aware of factoring’s benefits—immediate cash flow for unpaid receivables, no credit checks, a reliable option for businesses who can’t secure a bank loan, among others—it’s likely we’ll see an uptick in businesses using invoice factoring to grow and succeed.
Click here to see the full infographic from CBAC.
READ MORE FROM AMERICAN COMMERCIAL CAPITAL
Business Video Roundup: Sales Burnout, Thanksgiving & Lessons from the Pilgrims
Image: bhofack2 / Envato Elements
In this special holiday week business video roundup, Patrick Bet-David talks about why salespeople often burn out, CNBC explores the economic and market dynamics that are making Thanksgiving more expensive this year, and Business Insider shows how a turkey makes its way from the pasture to your Thanksgiving dinner plate—and why the prices vary so much. Plus, Steve Forbes looks at the lessons learned…
Business Video Roundup: Your Million Dollar Customer, Business Scale Lessons & More
Image: seventyfourimages / Envato Elements
In this week’s roundup of great videos for entrepreneurs and business owners, Patrick Bet-David reveals how to find your “million-dollar customer,” LinkedIn co-founder Reid Hoffman shares his best business scale lessons, and All Turtles CEO Phil Libin talks about how his new company intends to make video meetings more entertaining. Plus, the latest episode of Entrepreneur Elevator Pitch features women founders vying for investment…
Houston Factoring Companies: Why Choose American Commercial Capital for Invoice Factoring?
Image: SeanPavonePhoto / Envato Elements
If you are a Houston-based entrepreneur who has been searching for ways to improve your business cash flow and get the capital you need to grow, chances are you’ve come across a dozen Houston factoring companies who all claim to be the answer to all your problems. Invoice factoring, to put it simply, is when a business sells its accounts receivable (invoices) to a…
