History of Invoice Factoring and Growth during the 21st Century.

History of Invoice Factoring & its Growth in the 21st Century Invoice factoring is a popular alternative to traditional financing and it is a billion dollar industry with a large number of niche industries using it to get access to much needed cash flow, quickly and conveniently. With banks increasingly making it difficult (and in some cases freezing loans to small or new business) organizations and proprietors are partnering with professional factoring firms to solve their issues with liquidity. The concept of invoice factoring has remained the same throughout history and it has continued to play an important role in business finance. In the post economic recession banks are unwilling to lend to small businesses, which has made factoring a very popular option. What is Invoice Factoring? INVOICE YOUR BUSINESS CLOSE INVOICE FINANCE YOU COLLECT WE COLLECT %$4 INVOICE DISCOUNTING YOUR ACCOUNT FACTORING History of Invoice Factoring 4000 YEARS Factoring was first used in the day of King Hammurabi of Mesopotamia But, Factoring as we know it today got its start in the Middle Ages 1300s & 1400s Jewish businessmen fleeing persecution in Spain to Italy began lending money against the delivery and payment of grain shipped abroad and to distant trading ports. Merchants who solely bought and traded grain debt instead of the actually grain itself. 1600s & 1700s By the time English colonists settled in America, this type of financing had become common with merchant bankers in London advancing funds to colonists for goods and materials before they made the journey across the ocean. Fast Forward A Few Centuries 1910s - 1920s The most popular industries for invoice factoring were the garment and textile industries. In order to make sure that companies could continue to buy raw materials to produce clothing and textiles, factoring was used. 1940s IS United States almost wholly adopted non-notification factoring arrangements and witnessed a boom in factoring in textile industries and transportation industries. 1960s, 1970s & 1980s EN TOU S GENRE ROUTIN itre et Montie de Rabot Rising interest rates and bank regulations made invoice factoring more popular as it did not require the same sort Carresserie et FORGE A CHA of credit checks. NOBLE aliere uit How Invoice Factoring Works? There are three parties involved in the process of Invoice Factoring: FACTOR The factor obtains the right to receive the payments made by the debtor for the invoice amount. SELLER DEBTOR (one who sells receivables) (customer of the seller) The seller sells one or more of its invoices (the receivables) at a discount to the third party, the specialized financial organization (aka the factor), to obtain cash. The sale of the receivables essentially transfers ownership of the receivables to the factor, indicating the factor obtains all of the rights associated with the receivables. INVOICE The receivable is essentially a financial asset associated with the debtor's liability to pay money owed to the seller (usually for work performed or goods sold). %$4 Benefits of Invoice Factoring for Small Businesses Invoice factoring benefits businesses who provide terms for their clients and are not paid for 30 to 90 days. Up to 90% of the value of receivables can be factored to assist businesses. Factoring eliminates serous cash flow problems Factors evaluate the creditv rthines the client's customers and can fun within as little as 24 hours Invoice factoring companies can be a lifeline for new or small businesses who are not getting loans from banks 21* Century and Growth of US Invoice Factoring Industry Business Lending June 1998 - Sept. 2011: Rebound leaves small business behind All commercial and industrial Small business ( less than $1 Million) 1.4- 1.2- 1.0- 0.8- 0.6- 0.4- 0.2- 0.0- 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 By June 2012 small-business loans decreased $56 billion from the June 2008 peak of $336.4 billion Small Businesses with 40% annual growth were still declined by traditional lenders in the current economic climate. Demand for Invoice Factoring continues to grow Total Factoring Volume ($Billions) In the Year 2004 13% * 2% Asia Australasia 1% Africa Year 2004 13% 71% Americas Europe Europe Americas Africa Asia Australasia Total Factoring Volume ($Billions) In the Year 2010 22%* 3% Asia Australasia 1% Africa Year 2010 11%* 63% Americas Europe Europe Americas Africa O Asia O Australasia Since 2004, factoring in the United States has grown by about 15% Factoring volume reached $88.3 billion in 2011, an increase of 10.3% Comparison of United States with World Markets The United States accounted for 51% of the total factoring transactions in 2010. The Factoring Volume in US for 2010 was a Total factoring volume in the world for 2010 was 126227 2,190,002 (in Millions of USD) (in Millions of USD) Why Invoice Factoring Stands the Test of Time (4000 years & counting) Here are the top 4 reasons Invoice Factoring is the best solution for your working capital shortfall for small or medium sized businesses. Resolves cash flow issues. Cash flow is essential for making sure that your business is able to remain continue its sales momentum with confidence. Surviving Hard Times – A delayed billing cycle does not affect your overall business. Liquidity – Availability of immediate liquidity Uninterrupted Service For Your Clients And Customers Sources: Presented by: http://ucfunding.com/blog/?p=472 http://ucfunding.com/blog/?p=480 http://ucfunding.com/blog/?p=477 http://www.factoringhq.com/Involce-factoring-history/ http://www.lblsworld.co.uk/market-research/factoring.html http://www.dfsfactoring.com/history-of-Involce-factoring.html http://www.bestinvolcefactoring.com/article/history-of-factoring.html https://www.cfa.com/eweb/upload/CFA_Member_ABLFactoring 2011_Reports.pdf http://www.nbcnews.com/business/bank-loans-small-business-fall-12-year-low-1C7101049 http://boss.blogs.nytimes.com/2012/11/20/what-the-s-b-a-could-learn-from-the-alternative-lenders/ CBAC Total outstanding bank loans, trillions $ 33I0ANI DISCOUNTING FACTORING