Invoice Factoring for Business Growth

For many small and medium-sized businesses, there comes a critical growth stage where success is no longer measured by the number of individual transactions you can complete, but by your ability to secure and manage meaningful contracts. This transition represents one of the most significant plateaus in business growth; one that many companies never successfully navigate.

“Our business was growing pretty rapidly. We had a contract lined up with Marriott for six jobs in a row (that’s $150,000 worth of work) but we didn’t have the funds to float it,” recalls Dave Kip, CEO of Best Broadcast. “Each job costs thousands to execute, but with the 45-to-60-day payment schedule, I just didn’t have the cash flow to pay my people.”

Dave’s experience illustrates a common business dilemma: The very contracts that could fuel sustainable growth remain out of reach because the business lacks the working capital to build the necessary capacity. Without those contracts, however, generating that capital becomes nearly impossible. It’s a classic catch-22 that keeps countless businesses trapped at their current size.

Stuck on the transaction treadmill

Many businesses become trapped on what we call the “transaction treadmill”: an exhausting cycle of chasing one-off sales that provide short-term revenue while business costs relentlessly pursue you. Like a Pac-Man in an endless maze, you’re constantly moving but never really getting ahead.

While individual transactions keep you in the game, they represent a reactive rather than strategic approach to business. You’re always running: grabbing the next small order while payroll, vendors, and overhead costs chase close behind.

These one-off transactions come with significant limitations for businesses seeking sustainable growth:

Short-term focus: Individual sales typically represent one-time interactions rather than ongoing relationships
Limited scope: They often address specific, immediate needs without considering broader business objectives
Minimal commitment: They don’t establish the foundation for expanded cooperation that contracts provide
Reduced pricing power: Without volume commitments, businesses often can’t negotiate the best terms

In contrast, contracts are like finding those power-up boosts that transform your entire game. They offer a foundation for substantial business relationships, tailored for long-term engagements with renewal options that ensure service continuity and create sustainable revenue streams.

The contract capacity challenge

Moving from individual transactions to meaningful contracts isn’t simply a matter of paperwork; it requires developing contract capacity: the ability to execute multiple complex projects simultaneously while maintaining quality, meeting deadlines, and managing cash flow effectively.

The challenge is particularly acute for businesses in service industries, manufacturing, construction, and other sectors where fulfilling contracts requires significant upfront investment in labor, materials, or equipment before payment is received.

For instance, when Global Aviation began expanding its airline staffing services, they encountered a critical capacity challenge. Carm Borg, President and CEO, explains: “In this business, 90 percent of our costs are people-related. We have to make payroll every two weeks, but airlines only pay every 30 days. When you’re just starting out and ramping up quickly, it doesn’t take long to run into cash flow issues.”

Despite having the expertise and market demand, Global Aviation’s growth was hitting a ceiling because of this capacity constraint. The company needed to pay staff regularly to maintain service quality across multiple airline contracts, but faced a significant timing mismatch between their payroll obligations and client payment schedules.

Build multi-contract capacity through strategic factoring

This is precisely where invoice factoring transforms from an emergency cash flow solution into a strategic growth enabler. Think of it as your power-up: By converting unpaid invoices into immediate working capital, factoring provides businesses with the financial capacity to pursue and manage multiple contracts simultaneously. Suddenly, you’re not just surviving the maze: you’re conquering it.

A McKinsey report noted that companies across industries have 90 percent or more of their annual revenues represented in contracts with suppliers and vendors. This underscores how critical contract management is to business success and why developing multi-contract capacity is essential for sustainable growth.

Here’s how factoring builds this capacity:

1. Workforce Scalability

Taking on multiple contracts often requires expanding your workforce, either through hiring or subcontracting. This creates immediate payroll obligations that precede client payments (like needing to power up before you can take on the bigger challenges.)

Global Aviation’s experience powerfully demonstrates this aspect of contract capacity. With a factoring arrangement providing immediate access to working capital, they were able to grow their workforce dramatically; scaling from approximately 550 employees in 2016 to 2,500 in 2018. This expanded capacity allowed them to increase their airline contract portfolio from 20 to 55 contracts.

“We were basically doubling our growth every year, continuously,” explains Carm Borg. The company’s ability to manage multiple airline contracts simultaneously transformed their business trajectory, taking them from $6 million in annual revenue to over $24 million in just three years. They had found their strategic advantage and used it to go on offense and grow.

2. Material and Equipment Investment

Larger contracts often require substantial upfront investment in materials, inventory, or specialized equipment. Without adequate working capital, businesses must either decline opportunities or risk overextending financially.

Consider the experience of Best Broadcast, an audiovisual company that secured a series of contracts with Marriott International worth $150,000. Owner Dave Kip faced a significant dilemma: “If we couldn’t get funding really quickly, we probably couldn’t have done the jobs.”

By implementing a factoring solution, Best Broadcast could purchase necessary materials and equipment without waiting months for client payments. This enabled Dave to scale his average daily revenue from $1,000 to $5,000 (a 5x increase) by taking on larger, more profitable contracts. He had broken free from the transaction treadmill.

3. Administrative Infrastructure

Managing multiple contracts simultaneously requires robust administrative systems for tracking deliverables, deadlines, reporting, and compliance. Building this infrastructure is another critical investment that precedes revenue.

Summit Retail Solutions, a custom manufacturer of store display fixtures, leveraged factoring to build their administrative capacity alongside their production capabilities. By factoring $3 million over 65 fundings, they were able to establish the systems and processes needed to manage multiple retail client projects simultaneously.

“With Liquid Capital’s help, we have been able to solidify our fledgling company through growth to maturity,” explains former co-owner Ted Hope. This comprehensive approach to capacity building enabled Summit to more than double their sales, going from $1.4 million to over $4 million in just 18 months.

The multiplier effect of contract success

Successfully executing multiple contracts creates a powerful multiplier effect on business growth, generating benefits beyond immediate revenue. It’s like discovering that each major contract you complete opens up new areas of opportunity:

Enhanced reputation: Successfully fulfilling larger contracts builds credibility with other potential clients
Relationship development: Deeper engagement with clients often leads to repeat business and referrals
Operational improvements: Scaling processes for multiple contracts drives efficiency improvements
Talent attraction: The stability of contract work helps attract and retain higher quality talent
Strategic positioning: Moving beyond transaction-based business enables higher-value service offerings

This multiplier effect explains why breaking through the contract capacity plateau is so transformative. Once businesses demonstrate the ability to handle multiple contracts simultaneously, they enter a virtuous cycle where each success creates opportunities for further growth.

The 4 steps to factoring-fueled capacity building

If your business is stuck on the transaction treadmill, here’s how to implement a strategic factoring approach to break free:

Step 1: Assess your contract readiness

Before pursuing multiple contracts, honestly evaluate your operational readiness:

Process maturity: Do you have standardized processes that can be scaled across multiple projects?
Management bandwidth: Can your leadership team effectively oversee multiple contract engagements?
Quality assurance: Can you maintain consistent quality standards across expanded operations?
Financial visibility: Do you have systems to track costs and profitability by contract?

Step 2: Identify your working capital gap

Calculate the working capital requirement for pursuing your target contracts:

Upfront costs: Estimate labor, materials, equipment, and other direct costs
Payment timing: Analyze the gap between when costs are incurred and when payment is received
Administrative overhead: Include the costs of managing multiple contracts simultaneously
Contingency buffer: Add a safety margin for unexpected expenses or payment delays

Step 3: Structure your factoring strategy

Work with a factoring partner to design a solution tailored to your specific contract strategy:

Selective factoring: Determine which invoices to factor based on size, timing, and client payment history
Notification preferences: Choose whether clients should be notified of the factoring arrangement
Advance rate optimization: Balance immediate cash needs against the cost of factoring
Technology integration: Ensure your factoring solution integrates with your invoicing and accounting systems

Step 4: Build systems for contract success

Develop the operational infrastructure to support multiple contracts:

Project management: Implement tools to track deliverables, deadlines, and resources across contracts
Staff allocation: Create systems to allocate personnel efficiently between projects
Communication protocols: Establish clear communication channels for each contract
Quality controls: Implement oversight mechanisms to maintain consistent quality
Financial tracking: Develop reporting to monitor the profitability of each contract

Get off the treadmill and start growing

The transition from individual transactions to multiple contracts represents one of the most significant inflection points in business growth. It’s the difference between being a vendor that handles one-off orders and becoming a strategic partner that delivers comprehensive solutions.

Strategic factoring provides the power-up you need to step off the transaction treadmill. By converting unpaid invoices into immediate working capital, factoring enables businesses to build the capacity needed to pursue and manage multiple contracts successfully. Instead of constantly running just to stay in place, you can finally get ahead of your costs and start building toward sustainable growth.

As you consider your growth strategy, remember that factoring isn’t just about solving cash flow problems; it’s about creating the financial foundation for a more sustainable, relationship-based business model. By implementing the multi-contract strategy with strategic factoring, you can break through growth plateaus and transform your business from surviving to thriving.

Ready to explore how factoring could help you build contract capacity? Contact Liquid Capital to discuss how our flexible factoring solutions can support your multi-contract strategy.

Continue your factoring education

This article is the sixth installment in our 2025 Strategic Factoring Series. If you found this information valuable, explore our previous articles to develop a comprehensive understanding of how factoring can fuel your business growth:

January 2025: Say «Yes» to Larger Orders – How invoice factoring enables you to take on bigger opportunities without cash flow stress
February 2025: Time Your Growth – Using factoring to capitalize on seasonal demand and opportunities
March 2025: The Early Payment Advantage – Leveraging factoring to capture supplier discounts and lower your costs
April 2025: Smart Equipment Investment – How factoring your receivables can fund critical equipment and software purchases
May 2025: Building Your A-Team – Using steady cash flow from factoring to hire and retain top talent

Visit our blog to catch up on any articles you missed and strengthen your strategic approach to business financing.

Get Off the Transaction Treadmill and Win Contracts with Invoice Factoring