How Old Is Invoice Factoring?

A Brief History of Invoice Factoring

Invoice factoring has been around for thousands of years. Its roots stretch back to ancient civilizations, where merchants relied on it to keep trade moving and maintain steady cash flow. Over time, factoring evolved alongside global commerce, adapting to the needs of each era.

Ancient Times:
In Mesopotamia and the Roman Empire, traders used early forms of factoring to secure funds against future payments. This financial tool gave them the flexibility to expand trade and manage expenses without waiting on long payment cycles.

1300s & 1400s:
During the rise of European trade, factoring began to resemble its modern form. Merchants advanced funds based on delivery contracts, allowing goods to move faster across markets and reducing risk in international trade.

17th & 18th Centuries:
As England colonized America, factoring became essential for transatlantic commerce. London financiers advanced funds to purchase goods from the colonies, fueling economic growth on both sides of the ocean.

Early 1900s:
In the United States, the garment industry relied heavily on factoring. Manufacturers secured raw materials and kept production lines running smoothly by leveraging their receivables.

1960s:
By this decade, many Fortune 500 companies had embraced factoring as a proven method for stabilizing cash flow. It became a mainstream financing solution across industries.

Modern Era:
Technology and the internet have transformed invoice factoring. Today, businesses of every size can access fast, affordable funding. Fees have dropped significantly, and factoring companies now have billions available to support working capital needs. What was once viewed as costly is now a smart, flexible option for companies that don’t want to wait to get paid.