Quick Transport Solutions Inc.

The History of Invoice Factoring

Invoice factoring is one of the oldest, and one of the most misunderstood business practices.  Invoice factoring is a method of easing cash flow for businesses to operate while awaiting payments owed.  A factoring agent, often a bank will provide a cash advance to a business that is owed money, usually 70%-90%.   When the invoice is paid, the factoring agent remits the balance of the invoice to the business, subtracting a fee for the service.

Originally appearing in the time of the Ancient Roman Empire, merchants would hire collectors to settle trade debt.  When a spice merchant traded his goods with a silk merchant and the trade was a bit imbalanced, collectors would provide the side, which was shorted in the trade with a cash advance minus a small fee, then collect the debt from the person who owed.

Through the centuries, invoice factoring evolved.  Early settlers in America used factoring agents to sell cotton and tobacco around the world.  They would ship their products to England, and an agent would sell and collect for their goods around the globe, collecting a fee for his services.  English merchants and traders would do the same using American factoring agents.

As America and her economy grew, factoring agents were able to concentrate on domestic business.  All over the east coast, the industry grew significantly through the centuries.  Throughout the 50s-70s, the number of factoring companies, which through the years had ballooned into the hundreds, had consolidated and merged to the dozens.  Banks and other financial institutions began offering factoring services to businesses all over the country.

Over the last two decades, independent factoring agencies have become more popular, focusing on a variety of industry niches.  This has created a market where large banks and factoring agencies are focusing on traditional factoring companies and industries, while smaller companies are creating new paradigms and businesses.

Today, many long-haul trucking companies and owner-operators are dealing with the problem of clients not paying on time, and being left unpaid for work already completed.  A qualified freight factoring company partners with truckers, ensuring that they’re paid for the work that they’ve done.

Sometimes, trucking companies turn to factoring agents to alleviate cash flow problems.  When dealing with larger companies, sometimes payments can be sporadic.  Factoring allows companies to maintain regular cash flow to operate in the regular day-to-day operation of a trucking business.

Freight invoice factoring companies help millions of owner operators and freight companies maintain a consistent cash flow and grow their business each year.  It’s often as simple as sending invoices via email or fax to the factoring agent and receiving cash in just a few days to run your business.  Freight factoring is often dependent upon the creditworthiness of a company, and information to that nature should be verifiable.  Contact a freight factoring agent today to learn more.

Many successful owner-operators and freight trucking companies rely on factoring agents to ensure routine maintenance, fuel, and operation of their business.

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