A Brief History of Factoring (Accounts Receivable Financing)

The idea of speeding up a company’s cash flow through factoring is not new. Some variations of factoring go all the way back to the early days of civilization. Here is a short history of how factoring has evolved through the years:

2000 B.C.

Traders in ancient Mesopotamia (modern-day Iraq, Kuwait and Syria) use a form of factoring in their business dealings.


Modern factoring begins to take shape in England as a form of financing for clothing merchants.


The Difference Between Recourse and Non-Recourse Factoring

Factoring benefits your business in two important ways. First, factoring advances money on your accounts receivable and helps you build up cash flow. Secondly, a factoring company collects payment on those receivables from your customers. Having more cash on hand and a factor that handles collections gives you more time and money to run your company.

But what happens if a customer does not pay one of your invoices? That is where the differences in “recourse” versus “non-recourse” factoring come into play.


Important Questions to Ask a Factoring Company

Today there are more factoring companies to choose from than ever before. Factoring rates, fees and agreement terms are extremely competitive. That should work to your advantage as a potential factoring customer. Still, there are several issues to consider when selecting a factoring company.

Here are seven important questions you should ask any factoring company before entering into an agreement:


The Six Most Common Myths about Factoring

Factoring helps thousands of companies improve their financial situations each day. Yet some business owners have a negative perception about factoring their invoices.

There is a lot of misinformation about factoring, even though the financing of receivables has been around for centuries and is practiced in many industries. Below are six myths that cause some companies to shy away from factoring, even when doing so might stall their growth and financial performance:


What Is A Factoring Company?


Factoring vs. Merchant Cash Advance

Using factoring services or getting a merchant cash advance both put money in your bank account quickly, but there are several things to consider when deciding which is the best option for you.

What is Factoring?

Factoring is a financial service where a factoring company purchases your open invoices. You usually receive payment for those invoices within 24 hours. You can choose which invoices to sell to the factor and you’ll receive an advance on each of them. Some factoring companies advance up to 97% of the total amount of the invoice.


How to Switch Factoring Companies

Reasons for Switching

There are a variety of reasons why a company may consider switching factors. Maybe your factor doesn’t have good customer service – they’re not picking up the phones or they’re treating your customers poorly. Perhaps your factor isn’t funding your invoices in a timely manner. Or, maybe you found another factor with better advance rates and lower fees. Regardless, if your needs are somehow not being met, you may be ready to switch factors. But where do you start?


How is Factoring Different from Asset-Based Lending?

The factoring of accounts receivable and asset-based lending are sometimes confused as one and the same. However, they are two very different forms of financing.

While factoring is asset-based, it is structured differently from asset-based lending, providing different risks, costs and benefits to the customer.

What follows is an explanation of factoring and asset-based lending, and what makes these two financing models different from each other.


Factoring Helps Firearms Companies Boost Cash Flow, Meet Customer Demands

If your company is involved in the manufacturing and distribution of firearms or ammunition, you understand the pressure to meet growing customer demands.

The past two years have seen record sales for the firearm industry in the United States. According to FBI data, there were more than 23 million background checks for gun purchases in 2015. Last year, the number of background checks increased to 27 million. Manufacturers like Smith & Wesson and Sturm Ruger are seeing record sales, as are major firearm retailers like Walmart, Cabela’s and Dick’s Sporting Goods.



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