Invoice Factoring

Small Business

Working Capital

Top 5 Best Oilfield Financing Companies 2022

oilfield financing; oil rig drilling

Finding the right oilfield financing opportunity for your business can feel overwhelming. There are dozens of organizations that offer various forms of financing specific to the oilfield industry, all with their own terms and benefits. For those looking to cut through the clutter and find the best oilfield financing options, we’ve curated this short list so you can spend more time applying for funding instead of researching and chasing down slow-paying customers.

How Does Oilfield Financing Work?

Oilfield funding can come in various packages, including traditional loans and alternative financing. We’ll be discussing a very specific form of funding here—accounts receivable factoring. Unlike some financial measures and funding options that require extensive paperwork, accounts payable factoring, also known as invoice factoring, is a fast and efficient way to gain immediate working capital on a consistent basis.

Generally, oilfield factoring services work like this:

  • You apply and are approved for funding.
  • You get a quick cash advance on your invoice.
  • Your client pays your invoice to the factoring company according to the original payment terms.
  • The factoring company handles the account receivable.

When reviewing our top oilfield financing services options, we paid special attention to the transparency and simplicity of the funding process. (Also take a look at what to look for in oil and gas factoring companies for more information that could help you pick the right partner for your receivable financing needs.)

How Can Your Company Benefit from Oilfield Financing?

Oilfield invoice factoring provides several unique benefits as a financing solution, outside the access to millions of dollars in capital, including:

  • Simple repayment terms. Unlike other forms of funding, factoring is not like a bank loan in terms of creating long-term debt. While you get an advance of working capital, your customer takes care of the repayment naturally when they repay the invoice, taking one more thing off your plate while solving cash flow issues.

     

  • Faster collections. Once an invoice factoring company funds an invoice, they tactfully manage the process of collecting invoice payments. This translates into less work for you and/or your A/R team, ensuring focus on high-value tasks.

     

  • Quick and convenient access to working capital. Oil invoice factoring approvals are often fast processes, and it’s common for companies to get their cash advance within a few business days – cutting out months of waiting. This gives you fast capital to cover operating expenses.

     

  • Opportunities for growth. Using this form of fast capital to free up your cash flow allows your organization to take on growth opportunities and new projects.

Is Oilfield Financing Right for Your Company?

There are many reasons a business may require an invoice funding service over other types of funding. Factoring is likely a smart financial solution for your oil and gas business if you:

  • Need immediate working capital
  • Require capital for a project with a quick turnaround
  • Plan to hire more employees or buy new equipment
  • Need to cover a short-term gap in cash flow
  • Exhausted traditional lines of credit
  • Want more flexible funding that’s always there when needed

Oilfield Financing Costs

The main factoring fee is called the discount rate. This is the amount of money that the factoring company withholds from the invoice total as their payment for advancing cash and waiting to get paid for you. Typical invoice factoring rates vary somewhere between 1 and 6 percent. Sometimes, however, factoring companies list unclear rates or charge hidden fees on top of the discount rate. 

The fees oil and gas companies can expect vary depending on the oilfield financing company you work with. In addition to the percentage a factor keeps, sometimes there are hidden fees to watch out for:

  • ACH fee. This is the fee for the factor’s bank wiring funds to your account, passed on to you.
  • Application fee. A flat or percentage fee that’s highly variable. 
  • Invoice processing fee. A fee charged for getting your invoices processed in the back office. 
  • Closing fee. An additional amount the factoring company keeps from the invoice
  • Monthly fee. If you sign a contract requiring that you sell a certain portion of your invoices each month and you don’t meet the minimum, you could end up paying this fee.)
  • Termination fee. Again, this applies if you signed a contract and want to end it early. 

It’s easy to see how hidden fees can add up over time, making it important to ask any oilfield financing company you’re considering about their average invoice factoring rates and any additional fees.

For more about what you can expect in terms of invoice financing rates, check out our blog post.

Our Pick of the Best Oilfield Financing Companies

Why FundThrough

  • Unlimited funding for Velocity-qualified clients
  • Experienced with oil and gas industry invoicing
  • Get invoices paid directly into your linked bank account 
  • No minimums; choose which invoices to fund anytime you need to fund
  • Integrated with OpenInvoice, WorkBench, and QuickBooks 
  • Easy-to-use
  • 5-minute application process
  • Funding for companies in Canada and the U.S.
  • Largest AI-powered invoice financing platform in North America

Factoring Amounts

  • Express invoice financing: $5,000-$15,000
  • Velocity invoice factoring: Unlimited funding starting at $15,000

Pros

  • Obtain a 100% invoice advance
  • AI technology generates automated funding offers in minutes 
  • Transparent fees: 0.5% a week for Express, 2.5% per 30 days for Velocity
  • Unlimited funding ensures capital for any size project (for clients that qualify for Velocity invoice factoring)
  • Quick funding boost
  • Free credit checks on customers 
  • Downloadable reporting
  • Dedicated account executive and highly rated customer service team
  • Online management portal

Cons

  • You must use a form of online banking
  • Weekly repayment reschedule with Express

Why Momentum Capital Funding

  • Financing specific to oilfield companies
  • Located in Alabama, U.S.
  • Dedicated account executives
  • 24-hour access to an online system to manage your account.

Factoring Amounts

  • Invoice advance up to 90%

Pros

  • Fast financing
  • Access to their online management system
  • Can perform free credit checks on customers

Cons

  • Manual approval process
  • Low rate and funding limits transparency
  • 90% advance

Why Oilfield Funding, LLC

  • Customized funding for oilfield services companies
  • Headquartered in Texas, U.S.
  • Private equity and debt options

Funding Amounts

  • Working Capital: Up to $50 million
  • Senior Secured-Debt: $100 million+
  • Private Equity: Up to $100 million
  • Specialty finance: $100 million+

Pros

  • Great for large projects
  • Various types of funding
  • Texas-based

Cons

  • Lack of rate transparency
  • May have a longer application process
  • Longer approval and funding timelines

Why Millennium Funding

  • Headquartered in New York, U.S. 
  • Accounts receivable factoring
  • Fast cash advance on factored invoices

Factoring Amounts

  • Invoice advance up to 95%

Pros

  • Various financing options
  • Dedicated account executive
  • Available credit insurance

Cons

  • No rate transparency
  • Unclear limitations on funding
  • Manual application process

Why Caprock Funding

  • Focused on Midland and Odessa, Texas, U.S.
  • Invoice factoring only
  • Works in the oil industry

Funding Amounts

  • Up to $20,000 to $2,500,000

Pros

  • Online portal
  • Transparent process
  • Routine reporting

Cons

  • 80% advance rate
  • $0.05/ day starting rate
  • Can take 5-7 days for approval
  • Must complete a waiting period to get funding

Oilfield Financing Companies Summary

When finding a factoring service that fits your oilfield company’s needs, there’s far more than competitive rates and the funding amount to consider. Transparency, usability, and repayment terms also come into play. 

At FundThrough, we know that the best factoring experience is a long-term partnership. That’s why we are always happy to answer any questions you might have about invoice factoring. Experience the FundThrough difference and create a free account to see if you qualify for our invoice funding service today. 

Explore fast payments with an experienced fintech

Interested in possibly embedding FundThrough in your platform? Let’s connect!