Oilfield Services Factoring Services
Running a company in the oilfield services industry is no easy business, especially with payrolls to meet, equipment to purchase and deadlines that must be met. The sheer complexity of combining the geological research and modeling, imaging and exploration and finally the drilling to see whether oil is really present can take a lot of investment before any payoff can be seen. See Trucking Factoring Costs.
For those who own a Frac Sand Hauler for example, the efforts that must be put in to start such as business can be considerable. But the biggest challenge of all is trying to pay all expenses as the invoices get paid. A Frac Sand Hauler often has expenses that must be met immediately, but their invoices can take up to 60 days before they see the money.
What follows is an interview with Donald Slye, a man who owns a Frac Sand Hauler business and ran into the same difficulties that many new companies of his type face. In this interview Donald explains how he faced his challenges of paying expenses by using oil service factoring.
“Welcome Ray; can you tell us first of all why you wanted to begin your Frac Sand Hauler business, and what steps you took to prepare for the inevitable challenges.”
Donald Slye (DS): “I’ve worked in this business for more than 15 years, doing different jobs for different companies, from roughneck right through to foreman and deskwork. A few years ago I saw the potential of having a Frac Sand Hauler business in this area and got together with a couple of partners to create a company. We sat down, went over the details and decided that this would be a real good time to build a business that was serving a particular need in this industry.”
“So, I take it you created a business plan and took out the appropriate loans in order to purchase the equipment and hire the personnel necessary to get your company started?”
DS: “Yes, that’s right. I knew what was required in teDSs of equipment and personnel because I’ve been around this business for a long time. In addition, I already had contacts within the industry and I knew they could use my Frac Sand Hauler services. I knew there was some great potential to create a very profitable business.”
“So how were the first six months of running the business?”
DS: “At the beginning it was really great because my contacts had lined up some great project for me. Our loans covered the first six months or so of operations and we were doing quite well with the business we had. My partners and I were certainly happy and everything was going good when something really strange happened.”
“Could you elaborate on what you mean by “strange”?
DS: “Well, we started getting requests to work with other businesses in the area. This would mean having to expand our company through buying new equipment and hiring more people. But we did not have the cash on hand to make such a move. Because we were using the invoice system of payment we had to wait two months or more before we were getting paid.”
“You mean that you were making enough money, but couldn’t expand because of the invoice payment system?”
DS: “You got it. Add to that our initial money from the loan was running out and we needed to start paying it back as well. I knew full well that if we didn’t accept this new business that our competitors would, and it would be gone forever. So, we were in a real pickle until I heard about oil service factoring companies.”
“Tell us a bit about oil service factoring and how it helped you out?”
DS: “Well, one of my partners had heard about factoring companies, so we checked it out and decided to go with one that was best suited for our needs. The factoring company purchases our invoices and pays us with cash, so we always have money ready to cover any expenses that may arise. When the invoices become due, the factoring company collects from our clients. It’s really been a win-win for what we do.”
“That’s interesting. I wonder if you could you explain a little further just how factoring has helped your company?”
DS: “Of course; prior to factoring we had to wait a long time before our invoices were paid, but now we have ready access to cash so we can meet payroll, purchase equipment, hire staff, or whatever comes up. This meant that we could accept the new offers that other businesses were providing for us and not having to pass. Really, I just can’t say enough good things about factoring and how it really helped our business to continue flourishing.”
“Well, obviously factoring has really paid off for you. Are you still using factoring today?”
DS: “Yes we do. Although for the most part we still cash our own invoices, whenever we need money quickly so we can buy some new equipment or expand our business a little further, we go back to the factoring company and cash in our upcoming invoices. It has totally changed our business for the better.”
“I wonder what you would have done had factoring not been an option?”
DS: Quite frankly, I really don’t know if we could have survived without factoring. This is a business where you have to grab the opportunities as they arise, because if you don’t your competitor will step in. Basically, I don’t think we would be anywhere near the company we are today if it had not been for factoring.
Rays story tells us that his company may not have survived had it not been for oil service factoring, which allowed him to grow his company when he needed it most. For those businesses working in the oil industry, using factoring companies to purchase your invoices allows for great flexibility so your business can continue to grow while you take advantage of all the opportunities that come your way. Read also Trucking Factoring Costs.