Invoice factoring is not a new thing anymore. Many firms choose this particular option for securing immediate cash instead of applying for a bank loan. Here is how the entire process initiated and works: History of Factoring According to the Quarterly Journal of Economics, factoring has been around for six centuries. In the earlier times, factoring was used to finance all international trade deals. Advancement in technology has benefited the growth of factoring immensely, in countries like the UK and USA. Technology allowed the practice of factoring's modern form. How Does It Work? A business files for an invoice for the customer along with orders to pay the factor directly. The business also sends a copy of the factor to the factoring company. This company then pays a percentage of the invoice to the business. The customer can settle outstanding payments with this money. Moreover, this cash can also be used for day-to-day business activities. After the settlement of the debts, the factoring company pays the balance of the invoice to the firm. This amount does not include the associated fees. What are the Advantages of Factoring? The main aim of factoring is simple - improve the business cash flow and eliminating the delay associated with payment of invoices. This can reduce the burden of any additional or overhead costs. Better cash flow can improve the financial planning and forecasting. The factoring company also saves the firm from the trouble of recovering payment. This saves the time, efforts and money of the in-house team. Another advantage of factoring is - it offers an easy route to finance without any additional hassles. This is another reason why factoring invoice is more popular compared to a bank loan, these days. Select an experienced factoring company in Texas and settle your outstanding payments.