Invoice factoring is a unique form of financing that businesses depend on for consistent, working cash flow in the oil and gas industry. As company owners explore this option, they often wonder if they qualify for invoice factoring services. That’s why Oilfield Factoring would like to provide you with some standard information concerning the elements of qualification.
What is Invoice Factoring?
Invoice factoring is a simple process in which a business sells their open invoices to a factoring company like Oilfield Factoring. A factoring company will then pay an advance up to 90% of the value of the invoice. In most cases, this takes place within 24 hours of receiving and approving an invoice. Once an invoice is paid in full by a client’s debtor, the remaining balance of the invoice minus a small factoring fee is then remitted to the factoring client.
Invoice Factoring Qualification
Unlike traditional financing, factoring is not a loan. Therefore, qualifying for factoring is different. When a company takes out a bank loan, their credit, payment history, and business plans are reviewed before a lending decision is made. This process can be time-consuming and lengthy due to the strict qualifications banks have for lending. Even worse, many small businesses can’t meet those conditions.
To qualify for factoring, however, it’s the credit and payment history of a company’s customers that are taken into consideration. If a company is working for and providing services to debtors with strong credit and payment histories, then approval is quite easy.
Do I Qualify for Invoice Factoring?
One of the main reasons oilfield businesses use invoice factoring is because of the ease and simplicity of the factoring setup process. Unlike many traditional funding sources that require extensive credit histories and collateral to be approved for funding, invoice factoring is mainly concerned with the quality of your invoices, as well as the creditworthiness of your customers. Since the quality of a company’s invoices is entirely separate from the age of the company, even new companies with strong customers can qualify for factoring services without difficulty. At Oilfield Factoring, we have plenty of experience helping companies in a wide variety of situations. These include startup businesses with less than perfect credit, tax and bankruptcy issues, and rapidly growing companies.
Get Started With Oilfield Factoring
The application process is designed to be simple and quick. Most businesses qualify for oilfield factoring if they have credit worthy debtors, no liens on their A/R, and no pre-billing or progress billing. Apply now to get started. Our average turn-around time is two business days.
The application asks for your company information, your customers’ information, the credit limits wanted, and copies of the MSA’s if applicable. Once approved, we will determine favorable rates and terms that work for both of us. Once we have all documents signed, we will reach out to your customers and determine their invoicing and approval process. We have hundreds of customers in our system already, and likely currently work with your customers.
For a free, no-obligation factoring quote and conversation to qualify for invoice factoring with Oilfield Factoring, contact us by filling out our online form or give us a call at 1.866.834.7338.
