The History of Invoice Financing

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While to many of our customers and clients invoice financing may see like a very new concept, it has been around for literally thousands of years. Approximately 4000 years ago in Mesopotamia King Hammurabi used the process in Babylon, and it was very similar to the system used today.

Skip forward a few thousand years to the 1400s where you find the astute business professionals lending money on grain shipped around the world. Then, in the 1600s and 1700s the colonists obtained funding from bankers in London before they departed on their cross-ocean voyage to the New World.

In the United States

The first industry in the United States to use invoice factoring as a standard business procedure was the textiles industry. These companies had huge expenditures in cotton and raw materials which were required to fill orders and ultimately earn considerable profits.

Wise business professionals recognized this cash flow deficit and began providing interim financing to textile companies as early as the 1910 and through the 1920s. The companies were able to buy the materials they needed to create the fabric and clothing, and ultimately sell their products to retail venues.

In the 1940s, the transportation industry also used factoring. In this case long term hauling contracts, which didn’t cover the price of repairs to trucks, fuel and wages on an immediate basis, were still viable for the industry to consider to grow and expand.

Modern Times

Starting in the 1960s, companies and industries experienced greater difficulties and increasing delays in trying to obtain bank loans and other types of traditional funding.

This again brought invoice factoring to the forefront for forward-thinking business owners. With an increasing demand, which still continues today, the opportunity to factor commercial or B2B Accounts Receivables continues to grow.

If you have a business and are experiencing cash flow challenges between invoicing and payment, let’s talk. To get in touch call 866-513-1743 today for solutions to your cash flow problems.

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