A Short History of Accounts Receivable Factoring
That is the sort of arrangement known as “accounts receivable line of credit”.
However, do you know that the notion of speeding up business cash flow through invoice factoring is not modern? Some variations of invoice factoring trace back to early times of civilization. Following is how that evolved from then to now.
Mesopotamian traders used a kind of factoring in business dealings.
Modern factoring starts to take shape as a type of financing for English clothing merchants.
Factoring enters the “New World”. Colonists look for advance payments on certain raw materials transported across the Atlantic Ocean to England.
The First Industrial Revolution sweeps through Europe and the US. Non-recourse invoice factoring for clients with creditworthy buyers becomes more common.
Textile and garment companies in the US use it as a means to continue purchasing raw materials.
Some American banks start offering factoring services. Factoring booms in the manufacturing and textile industries.
1970’s and 80’s
Bank regulations and rising interest rates make it a more popular type of financing.
Major financial giants and banks enter the factoring space with their own offerings. Smaller factoring companies also start their business, targeting specific segments.
The Noughties and Beyond
Technological breakthroughs such as the internet and cloud-based platforms help make factoring quicker, and more accessible to businesses of all sizes.