A History of Factoring
Factoring dates back four thousand years to King Hammurabi ([1795-1750 BC]), the ruler of traditional Mesopotamia. He was the king who established the might of Babylon, known as the world's first metropolis. The Assyrian, Sumer, Akkadian, and Babylonian empires were considered part of Bronze Age Mesopotamia, the bed of civilization at that time. Mesopotamians are credited with first inventing writing, as well as putting the foundation into business with code and state regulation. It was the Mesopotamians who popped up with factoring. In fact,, one of the 1st written law codes on record was a group of laws called Hammurabi's Code. The organization of society was regulated by said code.
The earliest example of a ruler mandating orderly laws with the target of getting all men to stick to them was the Hammurabi Code. Carved upon a black stone monument that begins and ends with addresses to the gods, it stood 8 feet tall; the Code was intended to be in public view. Back then, laws were considered as requests, and anyone that annihilated and disobeyed it were cursed.
Some of these original laws were intended for their day and included stuff like if a person builds a house badly, and it falls and kills the owner, the builder is to be killed. If the owner's child was killed, then the builder's child is slain, that may be the basis for the old saying "an eye for an eye." Or, if a witness testifies falsely, then he is to be killed. Accused people were cast into the Euphrates River and were considered innocent if he made it to the shore unharmed. Back then, not many people could swim.
Though the Mesopotamians became an extinct civilization, factoring stayed and most each civilization with commerce has practiced some form of factoring, including the Romans. They were first to sell discounted promissory notes.
The earliest example of a ruler mandating orderly laws with the target of getting all men to stick to them was the Hammurabi Code. Carved upon a black stone monument that begins and ends with addresses to the gods, it stood 8 feet tall; the Code was intended to be in public view. Back then, laws were considered as requests, and anyone that annihilated and disobeyed it were cursed.
Some of these original laws were intended for their day and included stuff like if a person builds a house badly, and it falls and kills the owner, the builder is to be killed. If the owner's child was killed, then the builder's child is slain, that may be the basis for the old saying "an eye for an eye." Or, if a witness testifies falsely, then he is to be killed. Accused people were cast into the Euphrates River and were considered innocent if he made it to the shore unharmed. Back then, not many people could swim.
Though the Mesopotamians became an extinct civilization, factoring stayed and most each civilization with commerce has practiced some form of factoring, including the Romans. They were first to sell discounted promissory notes.
Back when goods were sent to America from the colonies before the revolution, the American colonies have used factoring. Banks weren't as bounteous then as they are today, and American colonists advanced They weren't under any obligation to wait to be paid. Advances against accounts receivables anticipated from clients were supplied by these factors during these colonial times.
During the Economic Revolution, factoring became more concentrated on the issue of credit, as factors assured payment for authorized customers.
Before 1930 in the United States, factoring occurred primarily for the textile and garment industries, and then after the war years, factoring expanded to other kinds of business.
Personal factors became reasonably popular when interest rates rose in the 1960's and 70's, heightening in the 80's thanks to the accelerating impact of interest rates and changes in the banking industry. Small businesses were forced to find other sources of financing for expansion and improvement so factoring became and still is a popular option.
The year 2009 is said to see companies using accounts receivable factoring to grow and profit, as well as survive, in a few cases.