In an interview with James Caan, entrepeneur and dragons den member, Caan spoke openly about using factoring and invoice discounting in his businesses.
When he first started out he was waiting for a payment from a client, which should have been at the end of the month, but the client didn’t pay up, and Caan wasn’t able to pay his staff, which meant he had to go to them and tell them.
He felt terrible, obviously, so luckily like others, when he discovered invoice discounting and factoring it made the process less stressful.
Winning the business is exciting but only half the battle, getting payment is another story all together.
Using invoice discounting and alternative methods of funding means that you won’t be a position where you have no money to pay your staff. That in itself is bad business and yes it is difficult when you are waiting for payments from clients, but if you have invoices to send out, rather than wait up to 90 days, you can get your money within 24 hours. This means you can pay your staff, you can pay your bills, you can purchase more materials and products, you can expand your company.
So if someone like James Caan endorses the use of alternative funding and invoice discounting, then surely we should all be thinking about using these types of alternative funding.
James Caan has had to walk away from deals in the past because he has not had the funding to pay staff for the project and for the work. It just shows that you have to be aware of your own funding and the options you can take to raise some funding.
If you are in a situation where you need to raise funding for business, get in touch with a factoring lender.