Often used by those in search of oilfield subcontractor financing and small-to-midsized oilfield services businesses that need to accelerate or stabilize cash flow, invoice factoring is a unique form of funding that is more accessible than traditional financing options. Approval is fast and easy, but many who have not gone through the process yet often wonder if they qualify for invoice factoring services. The short answer is that you probably do. We’ll break it down more in depth below.
What is Invoice Factoring?
Invoice factoring is a simple process in which a business sells its open invoices to a factoring company like Oilfield Factoring. A factoring company will then pay an advance up to 90 percent of the value of the invoice. In most cases, this takes place within 24 hours of receiving and approving an invoice. Once an invoice is paid in full by a client’s debtor (your customer), the remaining balance of the invoice minus a small factoring fee is then remitted to the factoring client (you).
Invoice Factoring Qualification
Unlike traditional financing, factoring is not a loan. Therefore, qualifying for factoring is different. When a company takes out a bank loan, its credit, payment history, and business plans are reviewed before a lending decision is made. This process can be time-consuming and lengthy due to the strict qualifications banks have for lending. Even worse, many small businesses can’t meet those conditions.
To qualify for factoring, however, it’s the credit and payment history of a company’s customers that is taken into consideration. If a company is working for and providing services to customers with strong credit and payment histories, then approval is quite easy.
Do I Qualify for Invoice Factoring?
One of the main reasons oilfield businesses use invoice factoring is the ease and simplicity of the factoring setup process. Unlike many traditional funding sources that require extensive credit histories and collateral to be approved for funding, invoice factoring is mainly concerned with the quality of your invoices, as well as the creditworthiness of your customers. Since the quality of a company’s invoices is entirely separate from the age of the company, even new companies with strong customers can qualify for factoring services without difficulty.
As an experienced oilfield factoring company, we have a long history of helping companies in a wide variety of situations. These include startup businesses with less-than-perfect credit, tax, or bankruptcy issues, as well as rapidly growing companies.
Get Started with Oilfield Factoring
The application process is simple and quick. Most businesses qualify for oilfield factoring if they have creditworthy customers, no liens on their A/R, and no pre-billing or progress billing. Our average turnaround time is two business days.
The application asks for your company information, your customers’ information, the credit limits wanted, and copies of the MSAs if applicable. Once approved, we will determine rates and terms that work for both of us. Once we have all documents signed, we will reach out to your customers and determine their invoicing and approval process. We have hundreds of customers in our system already, and likely currently work with your customers.
For a free, no-obligation factoring quote and conversation to qualify for factoring, fill out our online form.
