The word ''factoring'' originates from the Latin verb "facio" which means to work, i.e. one who does something for another.

Factoring is considered one of the oldest forms of trade support, with the fact that it was implemented in different time periods in a way that met the needs of that era.

Individual sources state that some forms of factoring were used in the ancient civilization of Mesopotamia and that there are records about it in Hammurabi's Code.

Several historical records speak of some form of factoring that existed in the Roman Empire. Manufacturers hired middlemen who would take over the goods, transport, store, sell, charge, and would take a certain percentage for their services. According to records, this way of doing business continued to develop during the Middle Ages. Over time, the middlemen became richer and were able to offer the producers funds on the condition that the money could be collected from the sale of the goods they took over. This was especially important for merchants in Europe who sold goods to emigrants in the newly discovered America, because several months passed from the moment the goods were sold to the moment they were transported to America. The middlemen functioned in the above-mentioned way until the 19th century, and then there was a significant technological development. The development of communication and transport technologies has made it possible for exporting producers to directly deliver goods to customers without the need to hire intermediaries. Although intermediaries have lost a part of their business, they have noticed that the need for financing exporters has not decreased. The basis for their further work and providing support to traders lay precisely in the sale of goods or invoices. Sellers sold their invoices to intermediaries (factors) who paid them money in an amount smaller than the amount of the invoice. This practice became popular especially in London in the 1950s because of the simplicity of the transaction and because of the "secrecy" as the debtors were often not informed about the transfer. It soon turned out that this was a bad practice for intermediaries because already during the 1960s they suffered significant losses due to debtors falling into bankruptcy or due to situations when goods were returned without any possibility for collections. After these experiences, the debtors were informed about the assignment of receivables, and the assignment was done in such a way that the intermediary, that is, the factor, had the right to charge the seller in case of return of the goods or bankruptcy of the debtor.

Since 1980, the role of factoring began to increase and to replace other payment instruments such as letters of credit.