Oil and gas companies also suffer from the numerous financial difficulties that plague long-term investment plans due to unstable cash flow, and this is why they turn to oil & gas providers factoring for help.
– Clients may take weeks or even months to fulfill their payments. This means the oil company will need to make do with whatever working capital they have to pay their employees, fund their business, and keep the company afloat.
– If the budget of the company is not enough they will have to turn to loans to sustain their production. This is not good for oil and gas providers due to the nature of their industry – loans are not often accredited to them because of the high risks and low chance of investment returns. Without a loan, production will have to be stopped, therefore reducing its profits.
– There are also many insurance and liability payments to take care of, that the production budget may not be able to cover immediately.
If you are a newbie oil and gas company, things will even be so much tougher for you. For the most part, new companies have little chance of securing a loan to start an oilfield operation because of their lack of credit history.
Accounts Receivables Loans or Invoice Factoring
Oil & gas providers factoring is a solution for both established and new companies alike. This is because they give both kinds of firms an opportunity that traditional loans cannot – instant cash flow that is guaranteed and insured.
Factoring often only takes 24-72 hours to process, making it much faster than a bank loan application. This is also several times faster than waiting weeks and months to finally get paid from the client who funds the oilfield operations. You could wait for weeks or you could get your payment in just a day or two. Your choice.
Is It Risky?
Of course there are always risks. The worse that could happen is if the client does not pay up. In this case the oil and gas provider will have to pay the factoring firm the money they got and then chase after the client so they can get paid. Unless of course if the factoring company offers some type of insurance where they will be the one to shoulder this risk in case it occurs.
The bigger risk is not getting the funds to operate your business. You won’t have money to pay your employees and you won’t have money to keep your operations going. So, if you want to secure instant cash flow that will keep your business operation running at all times then you may want to look into oil & gas providers factoring today, instead of taking the longer and often frustrating route of applying for a bank loan.
Interested in oil and gas factoring for your business, click here