Sometime around 1750 b.C.—the period of the First Babylonian dynasty—King Hammurabi made financial history twice. First, he enacted the Code of Hammurabi: 282 laws recorded on stone tablets that established the wages of an ox driver, among other things. And second, he developed the concept of accounts receivable (AR) as collateral. Ox drivers may be a thing of the past but AR financing remains with us, making it one of the oldest forms of lending in the world.
Despite marketplace demand and centuries of success, AR financing lacks for a proper strategy at many banks. The time to change that state of affairs couldn’t be better, though. As the economy expands, more financial institutions have diversified their portfolios to include commercial lending. They’re also starting to offer AR financing based on customer demand.
