There can be any number of reasons that a company needs access to fast cash. This is true for companies of all sizes, from single-owner to multi-national companies. But, with traditional credit avenues tightening, some companies can find it difficult to get the money they need quickly. This is especially true for businesses that provide services and products to companies in the oilfields whose customers traditionally take an extended time in paying due to the nature of the extraction to market process. Factoring invoices can play a major role in solving the financial issues for those providing the services and waiting on their accounts receivables.
An abundant amount of service providers in the oil field industry that have taken advantage of Universal Funding’s expertise in A/R financing including:
Vacuum Trucks and Operators
Site Preparation Service Providers
Wireline Service Providers
Factoring invoices is one of the quickest and simplest ways for these businesses to get money without using a line of credit or incurring debt. In essence, factoring invoices is when a company sells some (or all) of its accounts receivable to a factoring company. The factoring company pays the business a lump sum of money that is agreed upon before the transaction. This lump sum of money normally represents a substantial percentage of the total amount of the accounts receivable that were used for the transaction. Many times, a company can get as much as 80% to 90% of the value of the accounts receivable. Once the invoice is paid in full from their customer(s) a refund is issued for the remainder balance minus a small factoring fee.
If you are a service provider in the oilfield industry and can’t afford to wait for oil to be extracted and refined before you receive payment for the services you provided, give us a call. At Universal Funding, we understand the issues facing companies in your industry and are here to help. Call 1-800-856-7014 or fill out a rate form to speak with one of our Business Development Associates.
The fastest booming industries in the United States right now are oil/gas and invoice factoring. The oil/gas industry has reaped “$290 billion in profits over the last four years,” according to Thomson Reuters. And although the factoring industry has been in existence since ancient times, it has become a more common resolution to companies’ business finance needs in the past few decades.
The sudden boom in the oil and gas industry is thanks to the development of a method to tap “the largest contiguous oil deposit in the lower 48 states. There are an estimated 4.3 billion barrels of recoverable oil in a deposit under parts of the Dakotas, Montana and Canada — about half what the USA uses in a year” (Andrea Stone, USA Today).
Accounts receivable factoring has also experienced a recent boom due to the down economy and the need for alternative business finance methods. This multi-billion-dollar industry offers debt-free financing for business-to-business companies all over the world, especially those experiencing dramatic increases in demand for their products and services, such as those currently at work in the North Dakota oil patch.
Because of this massive oil deposit that has just recently become available through a technique called hydraulic fracturing, or fracking, companies in the oil and gas industry are growing by leaps and bounds. This new technology, along with the high demand, and therefore higher prices, of oil has made it possible for companies to extract the liquid gold from an otherwise inaccessible underground shale formation, raking in billions of dollars.
Even with the high profits being enjoyed by many in the oil/gas industry, many more small businesses are scrambling to install crews of workers in North Dakota to get their piece of the pie. Starting a new operation or expanding into a new area requires a capital investment that many small businesses don’t have access to right now. That’s where invoice factoring comes to their aid.
In order to keep the cash flowing from month to month many of these businesses, both large and small, are factoring their accounts receivable with Universal Funding Corporation (UFC), one of the most reputable business finance providers in the United States. UFC has provided millions to the oil industry and its supporting companies over the past decade and especially in the past few years with the increase in drilling in the North Dakota oil patch.
To learn more, please go to our Get Rate page.
Sometimes a situation arises that epitomizes the reason Universal Funding exists.
Every employee of this company takes great pride in helping clients grow, solve problems, and make more money. It’s our reason for existence.
Very recently, a business owner came to us with some severe money problems. The problems were not because his business was failing or because he was losing customers, the problems happened because his bank began making unreasonable demands as his business grew.
The business operates in the oil and gas industry and is growing as quickly as it can take on new customers. However, the business owner owed a lot of money to vendors. Over $150,000. In addition, his company burned through over $2,000 in diesel per day and still had to meet a hefty payroll that included a lot of overtime because the company is so busy. Add in other normal costs of doing business, equipment repairs, new equipment needed to finish jobs, etc, and there just wasn’t enough money to go around.
But here’s the real kicker: The bank wanted $72,000, immediately, or it would take back the company’s building, effectively putting it out of business. That makes no sense, because the company still had an outstanding loan for $100,000, which would never have been repaid had the bank taken the building.
For some reason, the bank was about to force a successful entrepreneur out of his growing business because it refused to acknowledge his success and restructure a payment plan based on money he was owed.
Banks can be great to work with, but they can also create severe problems when they refuse to bend on their demands.
Universal Funding saw the potential for this business, and knew it could help out. Through invoice factoring, the business owner got the money he needed to satisfy the bank. Not only that, now he doesn’t worry about how to pay employees or repair equipment and he can sleep at night knowing his suppliers will soon be paid in full.
There are companies in this same position across the country, and Universal Funding is in a position to help out and make sure growing businesses reach their full potential.
It’s what we’re here to do.
Traditional bank financing just doesn’t move fast enough for companies that do business in the oil and gas industry.
Oilfield service companies often have all kinds of equipment to help in the production and transportation of energy. Power units, vacuum trucks, frac tanks and anchor trucks are just a sample of the machinery companies operate on a continual basis. Demand for that equipment continues to skyrocket, which means business is moving fast.
In fact, business moves so quickly in this industry that companies need to have financing in place that can expand as fast as new opportunities arise. When a company knows growth is coming, it needs a flexible credit facility available to meet its needs no matter how much the company has in revenues and expenses.
Relying on the slow pace of bank financing can mean missed opportunities for new business. Out on the field, that could mean equipment sitting idle; which means no money coming in.
Accounts receivable financing, though, offers the flexibility to quickly respond to new opportunities while providing a credit limit that keeps pace with a company’s growth. In short, it means the equipment keeps running and the cash keeps flowing.
Universal Funding can provide that flexible financing along with the peace of mind in knowing there are no worries about trying to figure out the next financial relationship. We also know that things change fast, and make sure our clients have access to their account rep whenever a need arises. Whether there’s an issue that needs solved or a new opportunity that requires more funds, that person is always available to help.
In the oil and gas industry, a company has to strike while the iron is hot. The potential cost of not taking on a next job or customer is huge, but we all know it takes money to make money. Universal Funding can supply that money, and a business owner can rest assured that the business will grow and the next opportunity will easily be within reach.
Companies in all industries routinely face two obstacles:
- Unexpected expenses
- Late payments from clients
Companies in the oil, gas and energy industries may be even more prone to these issues than other businesses. Regardless of your industry, though, both of these problems can put a serious kink in how much cash your company has to work with each month.
How can a company keep itself in the black while waiting on customer payments or writing checks for new equipment or spending money to constantly fix stuff that breaks? A factoring plan can be a real lifesaver in situations like these. Invoice factoring allows business owners to get cash much quicker than they would through their normal accounts receivable operations.
Like, in a day or two, rather than a month or two.
Instant cash is just one of many benefits factoring can bring to your company. For one thing, factoring is not a loan so you won’t have to open a new line of credit or take on any debt repayment schedules. Another benefit is free access to business finance professionals who can help solve tax issues and resolve collection problems.
Of course, we can’t leave out the biggest benefit of all: more profit.
If you have customers in the oil and gas industry, you know all too well that they can wait anywhere between one and three months to pay! With factoring, though, you can receive the money you are owed within a few business days; money you are then free to use however you see fit for your business.
Universal Funding offers incredible rates combined with superior customer service, which means you could be on the path to faster cash, and more profits, in just a few days.
If you want to know how it’s possible, just contact Universal Funding today or fill out and submit the form to the left.
We hope to hear from you!
The news from places like North Dakota and East Texas flows as quickly as the oil from these now-booming areas.
In Williston, ND, the oil industry is causing as many headaches as benefits. The housing market is outrageously expensive; if housing is even unavailable. College students are leaving school for oil jobs. Others are taking classes just to take advantage of cheap student housing while they work the oil fields. As rents continue to rise, the city’s elderly and other established residents will struggle.
But… the oil boom is creating a massive number of jobs and generating truckloads of cash for people and companies involved in the industry.
Universal Funding has financing programs available to provide immediate capital to many of these oilfield service companies. Companies that provide welding, drilling equipment, maintenance, transportation and other services to active oilfields can benefit from the rapid financing provided by invoice factoring.
In most cases, payment arrives within 24 hours of generating an invoice, which means instant cash infusion and eliminating the 30, 60, 90 or more day wait often associated with oil industry payments.
Companies that factor incur no debt because they don’t borrow money. They just get quick cash that allows them to continue operating and grow. Plus, they don’t have to deal with the tedious tasks of collecting on their invoices, dealing with late payers and wondering how to bridge the gap between daily operating costs and finally getting paid.
Factoring is a perfect fit for companies working in the oil industry and money is available right now for those who need it.
Contact us today to find out how much money we have for you!