In the Oilfield industry, cash flow is an important factor that keeps businesses afloat. However, if you find yourself struggling to pay invoices, purchase equipment, and grow your business without adequate cash, it’s important not to throw in the towel. Cash flow problems happen to the best of us. Instead, you can achieve peace of mind with strategic planning to keep track of your money. That’s why Oilfield Factoring would like to provide you with the following solutions for cash flow problems.
Anticipate Cash Flow Problems
Anticipating cash flow problems ahead of time can mean the difference between making the most out of it and having to close your business. However, the only way to predict cash flow problems accurately is through cash flow forecasting. To do this you need to take a look at your business history and use this information to estimate how much money you brought in last year and factor in any major changes you had to deal with. This includes purchasing or repairing equipment, hiring additional employees, etc. Doing so will help you know how much money you actually brought in and how far you were able to keep your head above water.
Next, make a sales forecast and decide when you’ll receive payment for upcoming services. Keep in mind that not all businesses in the oil and gas industry operate on the same payment schedule. That’s why it’s important to predict when you’ll receive money based on the average time it takes for your clients to pay their invoices. Then, figure out how much your business spends on fixed costs, payroll, rent, equipment, and any other additional costs associated with your services. Finally, subtract your expenses from your revenue to come up with your forecasted cash flow. If you find yourself behind or barely scraping by, it’s important to create a plan for moving forward.
Prepare for Cash Flow Problems
It’s important to understand what can happen to your oilfield business if you don’t have enough cash flow. First and foremost, you may end up closing your doors. Before this happens, however, you’ll have to do your best to keep your business afloat by digging into any cash reserves that you may have until client payments start coming in.
While this may keep you operating, for the time being, a lack of cash will start to affect your business. You may have to turn down projects because you don’t have the help or supplies to fill an order. Furthermore, your employees may end up leaving because of late payroll. Before you start looking at traditional bank loans, however, it’s important to understand all your options. By gaining a full understanding of the problem and having a plan in place to move forward, you can save your business.
Cash Flow Solutions
Luckily for businesses in the oil and gas industry, it’s possible to fix cash flow problems without getting into major debt or losing major clients in the process. Aside from traditional bank loans, a popular funding alternative for a business with cash flow issues is oilfield invoice factoring. Oilfield invoice factoring can give you the money you need in cash or in a line of credit when you need it.
Furthermore, the application process is quick and easy meaning you can receive the money you need within days. You also won’t have to repay any money you receive from factoring because it’s not a typical loan. This will ensure you stay out of debt and have the cash you need for payroll, equipment, and operations. The best part? You can use the money you receive for just about anything. Oilfield invoice factoring doesn’t come with any strict rules or regulations attached. Once you receive payment for invoices, the money is yours.
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Cash flow problems don’t have to mean the end of your business. With the right planning, forecasting and options for alternative funding, you can successfully manage any stall in cash flow until revenue picks up.
Want more information? Take control of your future by contacting Oilfield Factoring at 1.866.834.7338 today. We’ve helped oil and gas clients from water haulers to frac sand trucks, pipe welders to roustabouts get the money they need to stay in business. As experts in our field, we understand the unique challenges you face and have an oilfield factoring program that will fit your needs and help you succeed in any business environment.
