A Brief History of How Factoring Built America

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.

Where Factoring is in our modern age.

• 1.221 Trillion € world wide 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 Asociation’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 factoringfirms popping up everywhere. As brokers it is critical to your bottom line to know what factoring firms are paying the best rates and have the best sales people who do not just take orders. For more information of top factoring companies contact kiefer.joe@gmail.com.