Factoring was already in existence way back in the time of King Hammurabi four thousand years ago. He was the king who established the greatness of Babylon, known as the world's first metropolis. Considered as the bed of civilization, Bronze Age Mesopotamia included the Akkadian, Assyrian, Babylonian and Sumer, empires. Mesopotamians are recognized with first developing writing, as well as putting the foundation into business with code and government regulation. Factoring began in Mesopotamia. In fact,, one of the first written law codes on record was a group of laws called Hammurabi's Code. The organization of society was regulated by said code.
The Hammurabi Code was the earliest example of a ruler publicly proclaiming a body of laws that were arranged in orderly groups, with the goal that all men could read them and know what was necessary, by law. Carved upon a black stone monument that begins and ends with addresses to the gods, it stood eight feet tall; the Code was planned to be in public view. Back then, laws were considered as requests, and anyone that annihilated and disobeyed it were cursed.
These ancient laws included stuff like slaying a person who built a house that would fall on its owner. If the owner's boy was killed, then the builder's son is slain, which may be the base for the old saying "an eye for an eye." Or, if an eyewitness testifies falsely, then he is to be slain. Accused individuals were thrown into the Euphrates River and were considered innocent if he made it to the shore unharmed. Back then, not many individuals could swim.
Although the Mesopotamians became an extinct civilization, factoring remained and most each civilization with commerce has practiced some kind of factoring, including the Romans. Promissory notes were first sold by them.
Back when products were shipped to America from the colonies before the revolution, the American colonies have used factoring. Banks weren't as abundant then as they are today, and American colonists advanced They didn't have to wait to get paid. It was these factors of colonial times that made advances against the accounts receivable of clients.
During the Economic Revolution, factoring became more focused on the issue of credit, as factors assured payment for licensed customers.
Before 1930 in the US, factoring occurred primarily for the textile and garment industries, and then after the war years, factoring expanded to other kinds of business.
Private factors became fairly popular when interest rates rose in the 1960's and 70's, heightening in the 80's due to the accelerating impact of interest rates and changes in the banking industry. Factoring is still a popular option as small businesses wanted to find alternative sources to finance growth and expansion.
The year 2009 is foreseen to see businesses using accounts receivable factoring to grow and profit, as well as survive, in some cases.
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