The oil and gas industry has proven year after year to be very lucrative. The profits can be outstanding for some companies, but in order to grow your business on a larger scale, they aren’t quite enough.
Getting financing for your oil or gas business can often be difficult though a bank because of the ever changing market. Some months, it may be simple to get funds for your business, while others are nearly impossible.
An alternative financing option called factoring can be a great solution for your oil and gas company. What is factoring? Factoring is a type of financing solution where a factoring company will purchase your business’s outstanding invoices, receivables, to keep your cash flow moving. Why will this benefit your oil and gas business? Keep reading to find out the 5 reasons why your business needs factoring!
1. Bid On More Jobs
Factoring will be able to help you build a secure source of capital. When the factoring company purchases your outstanding invoices, you can get up to 96% of the invoice in your pocket in less than 24 hours. You will never have to wait for your business’s invoices to be processed and cleared into your pocket again.
When your business has built up a strong source of capital, you are able to take on more jobs or projects. You will be able to control your cash flow to grow your clientele and your business.
2. Purchase Equipment & Supplies
Your oil and gas business relies on its equipment to get the job done right. You’d be nothing without it. When you use factoring, you will be able to care for or update your equipment without hurting your operations. You can carry on serving your clients without disrupting your business flow.
With new equipment, your business will be able to run faster, produce better results, and improve your overall business reputation.
3. Take Advantage of Seasonal Sales
Along with your equipment, your business relies on its inventory. From pipes to drills and more, your business needs these to operate on a daily basis. When you use oil and gas factoring, you will be able to take advantage of seasonal sales of your equipment. Not only will you be able to stock up for the coming months, but also save your business hundreds if not thousands of dollars.
With a secure source of capital, your business can stock up on necessary items to stay on top of jobs, even in slow periods.
4. Get Paid Faster
In the oil and gas industry, you are constantly faced with pending payments. When your clients are slow to pay for their services, it can burn a huge hole in your pocket. Rather than burning through cash while waiting for clients to pay, you can secure your capital.
With oil and gas factoring, your business will be able to get paid before the job has been completed. This will allow you to combat slow paying clients with ease.
5. Keep Your Credit Safe
When you factor your oil and gas company’s invoices, the factoring company will take ownership and responsibility for negligent payments. This will keep your business’s credit safe from clients that skip or delay on payments. Although the factoring company is not a collections firm, they will often take on the collections process, keeping your business free from piling paperwork and damages to solid credit scores.
We hope that you consider these 5 benefits of oil and gas factoring to grow your business and to take control of your cash flow.