Today, invoice factoring is one of the most efficient forms of alternative finance available in the business world. But did you know that the practice is actually as old as time itself?
It is true! Remember that invoice factoring is, by definition, the selling of accounts receivable at a discount. This concept was first developed by some of the world’s earliest civilizations. According to Jeff Callender, author of “Unlocking the Cash in Your Company: How to Get Unlimited Funds Without a Loan”, primitive forms of invoice factoring can be traced all the way back to Ancient Phoenicia.
Factoring further developed in Ancient Rome. According to “American Factoring Law” (Tatge, Tatge, & Flaxman 2009), Roman factors operated in a very similar manner as they do today. The Roman factor would help businessmen conduct financial transactions, purchase on their behalf in faraway lands and take goods on consignment.
The British Empire was the next major civilization to embrace invoice factoring. As the English colonized the world, it became necessary for companies such as the East India Trading Co. and the Hudson Bay Co. to turn to invoice factors when they needed access to working capital (Tatge, Tatge & Flaxman 2009).
And, of course, invoice factoring is very popular in the United States. But—did you know that invoice factoring led to the creation of America? The pilgrims actually funded their expedition to Plymouth by attaining working capital from London factors. Factoring paid for The Mayflower, and gave the settlers of the Northeast the money that they needed in order to settle what would become the United States of America (Tatge, Tatge & Flaxman 2009).
Factoring has a very rich history. From the Phoenicians to the Pilgrims, it has been a safe, efficient method of alternative finance. Just as it helped Roman farmers and British trade merchants expand their businesses, it can help your company expand today.