Oil and Natural Gas Services Financing and Factoring Solutions

Do you work in the natural gas and oil field services industry? Working with customers in the oil and gas industry can be very rewarding. However, these larger gas and oil corporations also tend to pay invoices in 40 to 60 days, which often puts a strain on cash flow.  This can lead to lots of opportunity if you can eliminate the cash flow issues.

If your cash is tied up in accounts receivables, eventually you will end up turning away new sales opportunities.  In some cases you may miss payroll or get behind on supplier payments.  The solution is finding a way to keep the cash flow moving quickly so you're not missing additional jobs waiting for the cash to roll in.

Going to the bank for a loan is almost impossible these days.  They are not real hot on newer businesses with rapid growth in the oil and gas services industry. Banks normally require 2 years worth of financial statements, tax returns, and personal financial statements from the business owners and take months to make a decision. The bottom line is if you really need the funding, they will not approve the loan.  Today's banks take little if any risk on when financing newer companies without established profitability.  If you have the potential to grow with solid gas and oil industry customers that take up to 60 days to pay their invoices, you should really give factoring invoices consideration.

Factoring invoices enables you get an advance on your invoices. This provides you with the needed cash to take on new projects meet payroll and pay suppliers. Invoice factoring can also be easy to set up when compared to traditional bank financing.  You need to make sure your working with a good factoring company.  If the factor is asking for financials and tax returns like a bank you need to move on to another factor.  The best factors that have been around for years won't ask for these time wasting items that are not needed to factor your invoices.  The factor should be most interested in the credit quality of your customers.

Invoice factoring is simple to use.
1. You deliver your product/service to your customer.
2. You submit the invoice to the factoring company for an immediate cash advance.
3. The factor company advances you up to 90% of the invoice total.
4. Once your customer pays for the invoice, the remaining 10% is returned to you less the factoring discount fee.

Factoring discount fees can range from .8% to 3% per month, depending on your sales volume and customer credit quality.

There are a numerous advantages provided by factoring invoices. It's normally easy to qualify for the needed working capital for your business. The biggest criteria are that you work with credit qualified companies. If you're looking a good factoring company you should be able to start funding in just a few days.  If the factoring company is telling you it takes a week or longer to start funding that is another sign to move on to another factor.   As the gas and oil services field continues to grow factoring accounts receivables should provide a great form of working capital.

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