Are you an oilfield goods or services contractor looking for faster payment on your accounts receivables? A specialist-factoring company, who understands the issues of your specific industry, can help to find an answer.
There is a buzz about factoring companies who specialize in certain industries. Invoice financing companies who offer industry solutions do so because they understand the process and have experience in specialist fields.
If you supply products or services to the oil and gas industry you will already know some of the issues you face when it comes to invoice collection. Similar to the government space, oil and gas customers are generally extremely reliable about payment, and have excellent commercial credit, but often require that their suppliers extend their invoice payment terms to 30 days at the minimum, but up to 60 or even 90 days.
Can you wait this long for payment? You have to juggle your capital expenditure and operating costs, such as:
- Meeting payroll
- Buying and servicing equipment
- Purchasing supplies
There is nothing worse than having to worry about when you are going to get paid so that you can keep your company operating successfully. You may have already attempted to offer incentives for early payment, such as discounts if payment is made by a certain date. This strategy can certainly work to your advantage, as long as your customers choose to take you up on the discounted rate and pay early. They may do this for one transaction, but decide not to in the future, leaving you potentially short of finances for imperative transactions.
Invoice factoring is a perfect acceleration tool for payment of those invoices tied to long payment cycles. Your cash flow source becomes predictable and you can cover your operational expenses and keep your production up to capacity.
So what are the basic criteria for factoring your oil and gas invoices, other than a steady flow of invoices?
- Your customers have good commercial credit
- Any goods or services to the oilfield have already been completed and accepted prior invoicing
- Your company is able to supply the factor with up to date financial information
- You have the required oil and gas industry experience
Once you are qualified, your company can take advantage of a stable and improved cash flow, which will allow you to support your business, and look to steady growth. The oil and gas industry is growing, and so is their need for goods and services, so make sure you are taking every advantage to keep the work flowing.