Invoice Factoring: From Face-To-Face Finance to Tech Powerhouse

The invoice factoring business – now a $3 trillion-a-year global industry – can be traced to ancient trading practices and medieval financial arrangements. Yet the premise, getting paid upon completion of work rather than waiting weeks or months for customers to pay their bills, remains unchanged. Imagine a weaver sending linen from Cairo to a merchant in Damascus, but the merchant won’t pay for the fabric until he sells it. A factor, a third party with adequate resources and either personal knowledge of the merchant’s good reputation or the wherewithal to track him down and collect payment, will advance the weaver the money he is owed, minus a hefty fee for taking on the risk of non-payment.

For centuries, the dual issues of verifying that the hypothetical shipment was sent and received and then guaranteeing that the merchant would pay were the crux of the factoring r ...

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