Oilfield Factoring: Over the past decade, the oil and gas industry has rapidly grown. In fact, many individuals are capitalizing on this opportunity by starting new service businesses such as water haulers, equipment haulers, roustabouts, welders, and more.
However, starting and growing a new business in the oilfield industry isn’t easy. While many individuals have the technical knowledge and experience to manage operations, they may not have the resources they need to manage necessary cash flow.
While this problem may seem trivial, it’s important to understand that many businesses quickly go out of business due to cash flow problems. That’s why Oilfield Factoring would like to provide you with the following financing information for service companies in the oilfield industry.
Cash Flow Problems
Most oilfield clients demand certain payment terms that allow them to pay their invoices within 30-60 days when they sign a contract with you. This is a pretty common industry practice as most clients are used to negotiating these types of contractual terms.
The problem, however, is that many oilfield service companies can’t afford to wait to get paid. They simply don’t have the financial ability to maintain company expenses while waiting for their clients to pay.
To help solve this problem, there is a better, easier financial solution – oilfield factoring. You can finance your service company using invoice factoring, a business financing option designed to solve your cash flow problems.
Oilfield Factoring
Imagine if your oilfield clients paid their invoices in a matter of days rather than 1-2 months. If your service company is like others in the industry, you wouldn’t have cash flow problems because you would have enough money to pay your employees, maintain equipment, and manage other important business expenses.
You can accomplish this by simply factoring your invoices. This doesn’t require any changes to the payment terms you’ve established with your clients. Instead, you partner with an invoice factoring company like Oilfield Factoring who finances your receivables from creditworthy clients. An oilfield factoring company then provides you with a payment advance on your invoices and holds the invoice until your client pays. This enables you to offer your clients flexible payment terms without risking cash flow problems for your business.
Ease Of Use
Implementing an invoice factoring solution is relatively easy and can be used by most oilfield service companies. At Oilfield Factoring, we can finance your invoices in two installments. The first installment covers a large percentage of the gross value of your invoice and can be wired to your account in as little as 24-48 hours. You will then receive the remaining invoice amount once your client pays minus a small oilfield factoring fee.
Keep in mind, however, that it’s important to have creditworthy clients in order to utilize any oilfield factoring solutions. This requirement works to your advantage because your credit isn’t taken into account. Furthermore, most established companies that you work with in the oilfield industry have established good commercial credit.
Strategic Advantage
Oilfield factoring can provide your service company with a strategic advantage. Unlike traditional financing solutions, invoice factoring doesn’t come with fixed financing limits. Rather, the amount you receive is based on the value of your receivables, the creditworthiness of your clients, and your invoice diversification. Furthermore, your invoicing line can grow as your business revenues grow, without having to repeat the whole underwriting process. This provides you with a flexible, dependable financial solution to support the growth of your company.
Invoice Factoring Solutions
At Oilfield Factoring, we are a leading invoice factoring company that’s funded hundreds of millions of dollars in invoices for our oil and gas clients, from water haulers to frac sand trucks, pipe welders to roustabouts. If you would like more information, fill out our online form or give us a call at 1.866.834.7338. We would be more than happy to answer any questions you may have and provide you with a specific oilfield factoring program that will fit the needs of your business to help you succeed.
