Factoring has a long and rich tradition, dating back 4,000 years to the days of Hammurabi. Hammurabi was the king of Mesopotamia, which gets credit as the “cradle of civilization.” In addition to many other things, the Mesopotamians first developed writing, put structure into business code and government regulation, and came up with the concept of factoring.
After a while, Hammurabi and the Mesopotamians went the way of extinct civilizations, but factoring endured. Almost every civilization that valued commerce has practiced some form of factoring, including the Romans who were the first to sell actual promissory notes at a discount.
The first widespread, documented use of factoring occurred in the American colonies before the revolution. During this time, cotton, furs and timber were shipped from the colonies. Merchant bankers in London and other parts of Europe advanced funds to the colonists for these raw materials, before they reached the continent. This enabled the colonists to continue to harvest their new land, free from the burden of waiting to be paid by their European customers.
Oh and let’s not get started talking about how factoring and purchase order financing made way for sugar to be shipped and turned into rum for the settlers of the then pre-United States of America. Some say it wasn’t really the tea that caused that rebellion to kick up in Boston.
Where Factoring is in our modern age.
• 1.221 Trillion € worldwide in 2008 1
– UK accounted for 18.9% of that volume
– US is 5th largest factoring country at 8.03%
• $136 Billion factored in US in 2008 2
• Part of $600 Billion Asset Based Lending Industry
• Factoring has consistently grown since 1976
• 513 US Companies listed as Factors 3
1 International Factoring Group’s Global Industry Activity Report 2008
2 Commercial Finance Association’s Annual ABL and Factoring Survey, 2008
3 International Factoring Association’s Annual Survey / SIC codes
We all know that since 2008 that factoring is a booming funding niche. There are factoring firms popping up everywhere. It has become easier and easier to not just access factoring but to qualify for business lines of credit, small business credit, merchant cash advance and more with Indigo Network. To learn more contact us today.