The cash flow industry has evolved, rather than emerged, through the natural business cycles of change and evolution. The industry has its roots in two seemingly unrelated methods of finance – owner financing and factoring.

This was the first method of financing that led to the emergence of the cash flow industry.  In an owner-financed sale, a real estate or business seller accepts a promissory note as a portion of the purchase price. The note is then secured by placing a mortgage on the real estate or business being sold.  Today, owner financing has become an established and accepted practice in real estate. And because of the private mortgage industry, owner financing is an even more attractive option that it once was in the past.

Factoring, or Accounts Receivable Purchasing, is the second method of finance that impacted the development of the cash flow industry. Factoring dates back to the ancient Roman civilization, when merchants used factoring to settle their trade debts.  Factoring started in America when early factors helped finance the pilgrims' journey to the New World.  As factoring became more established, it has become a major source of financing in the garment, transportation, and furniture industries.  Now that factoring has evolved into a very modern financing technique, businesses are continually using it to capitalize their growth.

When a business sells a product or service to another business, it sends the second business an invoice in order to collect the money due.  The first business can either wait for the invoice to be paid (eventually) or it can sell the invoice to a third party for a reduced amount. The latter transaction is called factoring.  Businesses can use factoring to stimulate cash flow.