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.
The following infographic 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.
Here’s the infographic on the history of factoring and its growth in the 21st century, courtesy of CBAC.
READ MORE FROM AMERICAN COMMERCIAL CAPITAL
Invoice factoring is a type of business financing unfamiliar to many small business owners. It provides a business with working capital and solves cash-flow problems, but it’s not like a bank loan or credit. So let’s break down invoice factoring and explain exactly what it is and how it can benefit your business.
So, what the heck is invoice factoring?
Invoice factoring is when…
In this week’s business video roundup, Gary Vaynerchuk asks the leaders behind major companies like Logitech and McDonald’s how they stay close to culture, Brian Tracy reveals how to get started developing successful habits that will help you achieve your goals, and Marie Forleo talks entrepreneurship with Floret Farm’s Erin Benzakein, who has successfully guided her business from garage startup to global distribution. Plus,…
In this week’s roundup of great videos for entrepreneurs and business owners, Gary Vaynerchuk talks about why hyper-focus can lead to missed opportunities, Marie Forleo reveals how to stay motivated when you’re being pulled in multiple directions at once, and Brendon Burchard explains five practices that every great leader must implement. Plus, five leadership lessons from Apple CEO Tim Cook and CNBC’s incisive look…