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Streamlined oilfield invoice factoring
WHAT'S IN THIS GUIDE
Many businesses in the oil and gas industry, particularly in key shale regions like the Bakken Shale, Eagle Ford, Marcellus, and Permian Basin, experience seasonal variances. This leads to uneven cash flows and gaps, with much of the industry’s earnings tied up in accounts receivable due to the project-based nature of the work. This creates challenges in covering daily expenses or investing in growth opportunities.
The frustration with chasing down unpaid invoices and late payments is a common stressor for business owners, further intensified in the oil and gas sector where payment terms can extend from 60 to 90 days, exacerbating cash flow delays.
Amid these challenges, the industry is on the cusp of significant growth, spurred by a 25% increase in major projects since 2020, as highlighted in recent industry analyses. In regions like the Bakken Shale, where production is expected to stabilize at 200,000 boe/d in 2024, the reliance on financial strategies like oilfield factoring has become increasingly crucial. These services offer immediate cash flow solutions, enabling businesses to navigate financial hurdles and capitalize on the growing opportunities presented by the current industry boom.
With years of experience serving hundreds of oil and gas service and supplier companies, we’re familiar with your unique invoicing and payments landscape. With our approach to invoice factoring for oilfield companies, you’ll avoid chasing down payments from accounts payable departments.
Here’s a look at why oil and gas companies like yours have chosen to work with FundThrough:
Full Flexibility: No need to fund all invoices from a customer, a monthly minimum, or obligation to fund; you can choose which invoices you want to fund.
One Up-Front Fee: Our transparent pricing structure features a single up-front fee with no hidden fees. For specific details, refer to our pricing page.
Dedicated Support: Rely on your account manager for personalized support at every step of the funding process.
Accounting Integrations: Seamless integration with leading accounting software like Enverus’ OpenInvoice and QuickBooks enables you to pull eligible invoices directly into the FundThrough platform for a seamless experience.
100% Advance Rates: We advance the entire invoice less one fee, maximizing your funding potential.
Unlimited Funding: Access as much funding as you have invoices for, even in the millions.
Quick access to capital: Get your invoices paid in days with FundThrough’s efficient funding process.
Easy funding process: FundThrough makes it simple! Submitting an invoice for funding is as easy as a single click after customer setup.
Our commitment to quick and easy funding, paired with our in-depth understanding of the sector, makes us an ideal partner in ensuring your business has the working capital to grow and thrive.
Oilfield invoice factoring is a specialized type of accounts receivable financing where your unpaid invoices are sold to a factoring firm for a fee, enabling you to access immediate cash way before the usual payment terms. This cuts the wait to get paid from months to days. Invoice factoring tailored for the oilfield sector offers a reliable and fast solution to address cash flow challenges that may hinder the growth of your business. This process not only smooths out the cash flow fluctuations caused by seasonal variations but also lowers the administrative burden associated with managing accounts receivable.
Knowing how the factoring process works will help you decide if it’s the right funding method for you and your business. It will also help you be able to better evaluate different factoring oilfield companies. After our simple set up, you can submit invoices to FundThrough for funding without the need for filling out time-consuming paperwork. Here’s how it works:
1. Create (or connect) your account. The first step in oilfield financing is to create a free account or connect your QuickBooks or OpenInvoice account to FundThrough’s dashboard. Setup takes just a few minutes. After that, we just need some basic information about your business to get you set up. A tech-backed company like FundThrough makes it easy to apply for funding online.
2. Select which invoice(s) to fund. You can upload into FundThrough’s online portal directly, or pull in eligible invoices from QuickBooks or OpenInvoice. We provide unlimited funding for your business based on the size of your outstanding invoices. Simply choose the invoice(s) you want to fund, and submit them in one click (after initial customer setup).
3. Invoice verification and buyer’s creditworthiness assessment: Before funding, FundThrough evaluates the creditworthiness of your buyer rather than focusing solely on your business’s credit score. This approach centers the decision on the likelihood of your customer paying their invoice on time.
4. Get funded, then, get back to business. Upon approval, funds are deposited into your business bank account as soon as the next business day. You can then get busy putting your capital to work for growth projects, covering payroll, purchasing equipment, making strategic hires, and more. Because factoring is not a loan, you don’t have to worry about taking on debt or making repayments.
5. Your customer pays the factoring company. When the invoice is due, the customer pays the factoring company according to the original invoice terms, and the process is complete.
There are several benefits of factoring for oilfield contractors. These are just some of the benefits to factoring the oilfield service businesses we work with have shared with us:
While different businesses will use factoring oil field services for different reasons, there are a few common use cases that come up time and time again. These are the top reasons for using oilfield factoring that we’ve heard from oil and gas companies like yours.
Online invoice factoring is more straightforward than some might believe. With just a few easy steps, you can secure the necessary cash flow to bridge any financial gaps or to capitalize on growth opportunities.
1. To begin the online factoring process, either sign up for a complimentary account or link your existing QuickBooks or OpenInvoice account with FundThrough’s online interface. Then, supply a few essential details about your company to start the process and determine your eligibility.
2. Next, decide which invoices you wish to finance. Through FundThrough’s online platform, you have the flexibility to upload invoices directly or import eligible invoices from your QuickBooks or OpenInvoice account.
3. Finally, receive your funds. Once your funding request is approved, the capital is transferred to your business bank account by the following business day. This swift access to funds empowers you to invest in your business’s growth with new projects, meet payroll, acquireequipment, or hire essential personnel.
Industry Experience: Experience with oil and gas energy industry means that a factoring company will understand the complexities of oil and gas invoicing and payments, making them easier to work with.
Speed and Efficiency: Many oilfield invoice factoring companies still use manual, paper-based processes, leading to a slow process. Save yourself time by partnering with a company that uses technology and automation to get you funded in days. Speed matters because you can’t pay your hires, buy materials, or go after that growth project if you don’t get funded quickly.
Unlimited Funding: For oil and gas specifically, the potentially unlimited funding that oilfield invoice factoring provides is appealing. You might find yourself in a position where you need to access a large amount of funding for your projects, and you’ve hit your limit with line of credits or other factors. Take advantage of every opportunity without worrying about funding limits with FundThrough even into the millions!
Contract Flexibility: Consider the flexibility of factoring agreements. Services like FundThrough offer spot factoring, allowing you to choose specific invoices for funding, giving you control over your cash flow.
Minimum Volume Requirements: Evaluate if there’s a necessity to factor all invoices. Flexible options can be more cost-effective if you need only a portion of your receivables advanced.
You can check out FundThrough’s pricing here.
Advance Rate: This refers to the percentage of the invoice amount that the factor is willing to give you up front. Many factoring companies only have advance rates of 80%. The whole point of a factoring program is to put your money to work, so you need as much of it upfront as possible. With FundThrough, you get the entire invoice value, less the factoring fee, upfront.
Service Level Agreements: Inquire about funding timelines post-invoice submission. Once your customer is set up, FundThrough can offer same-day funding, significantly benefiting your cash flow management.
Reputation: The factoring company’s reputation matters since they will interact with your clients. FundThrough’s strong reputation is backed by partnerships with QuickBooks and Enverus and a 4.9 star rating on Google.
We work with a wide variety of companies who benefit from oil field factoring, including financing oilfield suppliers in these specializations:
Global Pipeline partnered with FundThrough to accelerate its cash flow, making it possible for them to scale up on larger projects and make bids on projects worth millions of dollars.
The main factoring fee is also called the discount rate, and is the amount of money that the oil and gas factoring company withholds from the invoice total as their payment for advancing cash and waiting to get paid for you.
The cost of factoring for oilfield service providers varies from one factoring company to the next. We can only speak to FundThrough. With us, you’ll always know the cost of factoring before you fund an invoice. We don’t charge hidden fees, and and there is no cost to open an account. See our pricing page for more info on our oilfield invoice factoring rates.
Don’t forget that payment terms are a part of pricing too. Extended payment terms mean higher costs in the long run, and terms tend to be longer in the oil and gas sector compared to other industries. Ultimately, it’s up to you to decide whether it’s worth having funding now to take on a project that will grow your business long-term, or to make payroll with peace of mind, or whether it’s better to wait it out for your customers to pay.
Here are the main requirements for qualifying for oilfield invoice factoring:
Like most things, the answer as to whether or not oilfield factoring is better than a loan depends on your situation. Here’s why some of our clients prefer oilfield factoring to a loan:
Your questions answered.
On the surface, invoice financing for the oilfield and invoice factoring might look the same — they both allow you to turn outstanding oil and gas invoices into cash, after all. However, there are some differences when it comes to invoice factoring vs financing.
With invoice factoring services, you sell your invoice to the factoring company. They give you 100% of the invoice value (minus the factoring fee) in exchange. The factor then works with your customer to redirect payment from you to them.
With invoice financing for oilfield, a factoring company gives you money for your unpaid invoices. You repay the factoring company for this cash advance over an agreed upon period of time, with the financing fee spread out across the payments. Additionally, you are still responsible for collecting payment from your customer.
Typically, B2B businesses that have to wait months for customers to pay their invoices. Often, businesses turn to invoice factoring for quick cash to make payroll on time, purchase equipment, make hires, and go after growth projects.
No, banks generally don’t offer invoice factoring. Banks are in the business of lending money.
Interested in possibly embedding FundThrough in your platform? Let’s connect!