How BPOs Can Leverage Specialty Financing to Win Larger Contracts

Businesses are increasingly outsourcing not just to save costs, but to leverage AI and automation for faster, more accurate, and smarter operations. Business Process Outsourcing (BPO), also known as shared services, is a growing industry with an anticipated 7.50% CAGR to 2030. However, it is a highly competitive sector, not just in terms of cost, but also in terms of technology, specialization, geography, and regulation.

Big contracts mean big opportunities that provide longer-term revenues, stronger client relationships, and a competitive edge. To win these contracts, BPOs must combine advanced technology and industry expertise with proven scalability, strong compliance, and the financial strength to deliver reliable, high-value outcomes at enterprise scale.

Technology, expertise, scalability, and compliance can be built through investment and talent. Achieving financial strength to cover upfront costs and sustain delivery often poses the most significant challenge.

For many BPOs, the upfront costs of contract proposals and scaling services create a liquidity gap that traditional financing is unable to solve because it is too slow or rigid.

This article outlines the financial challenges BPOs typically face when bidding on large contracts and explains how specialty lending, which leverages business assets as collateral, can provide fast and reliable access to working capital. By using receivables, and often equipment, BPOs can secure the funding needed to pursue larger contracts and scale with confidence.

Financial challenges when bidding on large contracts

Securing major contracts can unlock growth and long-term stability for BPOs, but the financial hurdles involved often create barriers to success.

To win major contracts, BPOs must first address the following key financial challenges:

High upfront costs: Securing a large client contract often requires scaling operations quickly. This might mean hiring employees, investing in training, expanding office or data center capacity, or upgrading IT infrastructure. All these costs occur before revenue from the contract starts flowing.

Extended payment terms: BPO clients often impose long payment terms of 60, 90, or even 120 days, which can strain cash flow.

Rigid traditional financing: Securing a large traditional loan is challenging as it typically requires strong historical financials, collateral, and long approval processes. Even if approved, rigid loan structures may not align with the business’s cycle of contract onboarding and execution.

Competitive pressure: Clients want assurance that providers have the resources to handle scale. Without financial backing, a BPO may lose out to competitors that can demonstrate greater capacity.

How specialty financing creates an advantage

To achieve financial strength, businesses need consistent cash flow, access to flexible funding, and a solid balance sheet that supports both day-to-day operations and long-term growth. This often requires effective working capital management, strategic investment, and reliable financing options to navigate challenges and capitalize on opportunities.

Specialty lending options, such as Accounts Receivable Financing and Asset-based Lending, are ideal funding solutions for maximizing access to credit and receiving fast, flexible funding.

Accounts receivable financing

The rising need for liquidity among businesses is driving the growth of the Accounts Receivable (A/R) financing market. It is anticipated to grow at a rate of 6% CAGR up to 2032. A/R Financing enables BPOs to convert unpaid invoices into immediate cash, rather than waiting months for clients to settle their accounts. A specialty lender purchases the receivables at a slight discount in exchange for immediate cash.

Here’s how it works:

• The business provides goods or services and issues an invoice to the client.
• The specialty finance provider advances a percentage of the invoice value, up to 90% minus fees (the discount), typically within 24 hours.
• The customer pays the invoice directly to the finance provider on the agreed terms. In a confidential (non-notification) arrangement, the customer will not even be aware that the invoice has been financed.
• Once payment is received, the remaining balance is released to the business.

The process repeats with each invoice submitted for financing.

Benefits for BPOs:

• Improved cash flow: Day sales outstanding (DSO) is reduced from weeks and months to hours. Fast cash enables undercapitalized businesses to cover payroll, onboarding, and training without delay.
• Non-debt funding: This financing arrangement is based on the sale of receivable assets and therefore does not accrue debt or create new liabilities.
• Flexible financing: Minimal to no covenants ensure borrowers have maximum control of how funds are used without lender oversight or restrictions.
• Cost-free AR management: The finance provider manages collections professionally and courteously, relieving the business of the administrative tasks associated with accounts receivable management.
• Scalable financing: As contracts grow, financing grows alongside receivables.

Case example:

Skyview Capital leveraged eCapital’s A/R Financing to unlock $40 million in liquidity for its portfolio company, enabling continued growth and strategic investment without relying on restrictive traditional lenders.
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Asset-based lending

Driven by increased demand for flexible financing solutions, the asset-based lending (ABL) market is anticipated to grow at a CAGR of 11.0% over the next 10 years. ABL provides a revolving line of credit secured by a company’s assets, such as accounts receivable or equipment. It offers ongoing access to working capital as assets grow.

Here’s how it works:

• The lender evaluates a company’s assets.
• A revolving line of credit is structured, with borrowing capacity tied to the value of eligible assets.
• Funds are drawn as needed.
• Asset values are periodically reviewed to adjust limits.
• Payment schedules can be tailored to align with cash flow cycles. As the business collects receivables or liquidates assets, payments reduce the loan balance and replenish its borrowing capacity. Credit limits can increase if additional assets are secured against the facility.

Benefits for BPOs:

• Flexible credit: Funding is tied to asset value, not rigid credit history.
• Ongoing liquidity: Supports both contract onboarding and day-to-day operations.
• Flexible financing: Few restrictive covenants
• Growth alignment: Borrowing capacity grows with receivables and assets.
• Strategic investment: Frees up cash to invest in technology upgrades or new service lines while pursuing larger clients.

Why specialty financing outperforms traditional loans

Specialty financing offers distinct advantages for growing BPOs:

• Speed: Approvals and funding happen in days, not weeks or months.
• Flexibility: Facilities scale with contract volume and business growth.
• Asset-focused: Decisions are based more on receivables or assets, rather than credit history.
• Liquidity without debt strain: A/R Financing and ABL facilities do not impose rigid repayment schedules or restrictive covenants.
• Industry expertise: The best specialty lenders are experienced in helping BPOs expand and grow their business. Their knowledgeable team can provide expertise and industry insights to help guide strategic decisions.

Conclusion

Winning larger contracts is the key to scaling and strengthening market position, but the upfront costs and long payment cycles create a financial barrier. Traditional business loans, with their rigid criteria and slow timelines, often fail to bridge that gap.

By leveraging A/R Financing and ABL, BPOs gain the liquidity they need to pursue ambitious contracts, cover upfront costs, and reassure clients of their capacity. These specialty financing tools not only solve short-term cash flow challenges but also provide the flexibility to sustain growth and outperform competitors.

Contact us to explore the features and benefits of specialty financing to support growth, and learn how our experienced team can bolster your efforts to win large contracts.

Key takeaways

• Business Process Outsourcing (BPO) is a growing industry; however, it is a highly competitive sector.
• To win large contracts, BPOs must combine advanced technology and industry expertise with proven scalability, strong compliance, and the financial strength to deliver reliable, high-value outcomes at enterprise scale.
• For many BPOs, achieving financial strength to support upfront costs and sustain delivery often poses the most significant challenge.
• By leveraging accounts receivable financing, or asset-based lending, BPOs can unlock the liquidity they need to pursue ambitious contracts and reassure clients of their capacity.