Oilfield Factoring

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Ezra Cabrera

October 25, 2021

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Oilfield Service Companies

Factoring for Oilfield Service Companies

The oilfield services industry has not only been growing rapidly, but it’s been changing at a dramatic pace. The dynamic industry requires oilfield service companies to keep up with new technologies, replace old equipment, and change with ongoing demands. In addition to changes the oilfield industry has also been exposed to tremendous volatility. With swings in oil prices and production oilfield service companies have had to manage through ups and downs in cashflow. This presents a host of challenges, but the biggest one is keeping employees on payroll and managing outstanding equipment debt when oil companies slow pay their invoices. Keeping employees on the payroll during cashflow gaps can be the catalyst when new opportunities arise. To manage the industry volatility many business owners, turn to factoring for oilfield service companies. Speak with an oilfield factoring specialist today to learn more about our programs!

Benefits of Oilfield Factoring

A majority of large oil and gas companies pay invoices between 30 to 60 days, and sometimes as long as 90 days. When this occurs, it results in a trickle-down effect to oilfield service companies. Oilfield service companies are not only laying out money for materials, labor, and equipment, but they are also waiting extending periods of time to get paid. Even when invoices are paid “on time”, the cash outlay is a least 60 days. The best way to combat the cashflow gap is to use oilfield factoring programs. Factoring programs for oilfield service companies provide instant payment on invoices. By accelerating payment on open invoices there is no longer a cashflow gap that companies have to manage through. Advance rates are typically 85% to 95% of each invoice and paid within 24 hours of billing.

When using invoice factoring companies are able to redirect focus from cashflow and operations to growth and expansion. Available capital means additional resources to look for new contracts and expand your business. Invoice factoring for oilfield services provides the liquidity needs for both day to day operations and growth. Some of the benefits to oilfield service factoring are below.

Employee retention from on time payroll

Off balance sheet financing with no monthly payments

Available capital to bid new jobs

Invoice payments within 24 hours

Up to 95% advance rates

Improved working capital for day to day expenses.

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Choosing the Oilfield Factoring

Choosing the Oilfield Factoring Company

Every company should spend time researching potential business relationships before entering into an agreement. This is the same when choosing an oilfield factoring company to work with. Make sure that you work with a factoring company that has a deep understanding of your industry and takes the time to learn about your company. Our oilfield factoring specialists at SMB Compass will always make it a point to provide as much information and transparency as possible. Speak with a factoring advisor today to learn more about how SMB Compass can provide the working capital solution you are looking for.

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