For oilfield service companies, it is vital to have steady cash flow to keep up with daily operating expenses. When typical pay terms are 30, 60, or even 90 days, this can be a challenge. Invoice factoring, also known as accounts receivable financing, is a cash-flow solution many oilfield service companies use to gain access to cash that is tied up in their receivables.
What Is Invoice Factoring?
Invoice factoring is a financing solution that eliminates the wait for customer payments. Instead of waiting weeks or months, invoice factoring pays you same day on your invoices, giving you the working capital you need to maintain and grow your oilfield service company.
How Does Factoring Work?
Factoring is pretty simple.
- Complete your work as normal.
- Prepare the invoice as you always have, but instead of sending it to your customer, send it directly to the factoring company.
- The day the factoring company receives it, they will advance a percentage, usually around 90 percent, directly into your bank account.
- The factoring company sends the invoice onto your customer and waits for payment.
- Once payment is received weeks or months later, you’ll receive the remaining balance minus a fee for the service.
How Much Does Factoring Cost?
The cost of factoring varies based on a number of variables such as industry, monthly invoicing volume, and your customers’ payment trends.
Why Do Companies Factor their Invoices?
Companies choose to factor their invoices for a variety of reasons, but here are the top five reasons companies use factoring.
- Eliminate the cash-flow gap caused by slow-paying customers.
- Build steady cash flow.
- Grow their business without adding debt.
- Credit issues such as no credit, less-than-perfect credit, or maxed-out credit.
- A busy staff that can’t handle all of the invoicing and collections.
Speed Up Your Cash Flow Today
TCI Business Capital is proud to be the number-one oilfield factoring company in North America. With more than 20 years of experience and a proven track record of superior customer service, we’ll supply the cash your business needs to thrive.
Not only do we provide same-day funding, low rates, and 24/7 online reporting, we offer many value-added services at no additional cost to you. Some of these include; credit management, risk assessment, accounts receivable management, dedicated account managers, and fuel card programs.
If you’re tired of waiting to get paid and could use the cash that is tied up in your receivables, it is time to get started with factoring. Give us a call at 800-707-4845 or visit our website.