Oilfield Factoring
The oilfield industry is a booming nationwide. Whether your a service company that operates in Texas or North Dakota, you may be working hard to get the equipment you need to meet rising demands.
Things like trucks, pumps, sprayers, welding equipment, and other assets can cost hundreds of thousands of dollars. That’s why so many oilfield service companies decide to lease their equipment rather than purchase it. This helps them to avoid large down payments and high-interest rates that come with traditional lending thus freeing up important cash flow that allows their company to grow and operate.
That’s why Oilfield Factoring would like to provide you with the following reasons you may want to consider leasing the equipment you need for your service company.
Less Expense Equals More Capital
One of the greatest benefits to leasing the equipment you need is the ability to save money and apply it to other areas of your business. Leasing often doesn’t require any large down payments. Furthermore, an open-end lease provides you with more operating flexibility. This allows you to claim and deduct lease payments as monthly operating expenses, providing you with significant tax benefits at the end of the year.
Leasing the equipment you need also spares you the time and work it takes to obtain a line of credit to finance a big purchase. You may also be able to afford more up-to-date equipment by leasing it rather than buying it.
Last but not least, leasing agreements often offer fixed terms for a period of 24-60 months. Unlike traditional lending, you won’t have to pay more towards the principal every month to reduce future interest rates. This makes it easier for you to plan your operating budget around a lease payment.
More Flexibility With Less Risk
Leasing also provides you with greater flexibility when it comes to unforeseen expenses and economic downturns. Short-term leases allow you to expand and reduce the amount of equipment you need to operate your business as the market fluctuates. This, in turn, allows you to determine what kind of equipment is a good fit for your company before you make the big investment of purchasing it in the future.
Last, but not least, there are a wide variety of lease agreements that provide you with the opportunity to purchase the equipment. Depending on the lease you sign, you may have the choice of returning the equipment, renew your terms, or purchase the equipment at its fair market value at the end of your lease terms.
Less Headaches
One of the disadvantages of owning major equipment is that you are responsible for keeping it in working order. Breakdowns can lead to major unexpected expenses that can interrupt the operation of your business. However, if you have a full-service lease agreement, the company that you lease from is responsible for its upkeep.
Easy Exit Strategy
Despite the age or condition of the equipment you purchase, it will degrade over time. Furthermore, when you own large machinery that you no longer need, you will have to figure out a way to sell it. This means you will more than likely have to settle on a much lower price than what you actually paid when you purchased it. Leasing equipment, on the other hand, provides you with an easy exit strategy when it comes to aging equipment and equipment you no longer need.
Oilfield Factoring Services
Things change quickly out in the field. Whether you decide to rent or purchase the oilfield equipment you need, it’s important to review your business financials to see what makes the most sense for your company.
At Oilfield Factoring, we understand the unique challenges of the oil and gas industry and are dedicated to connecting businesses with the resources they need. This includes the funds to rent or purchase the equipment you need to maintain and grow your business. Contact us today at 1.866.834.7338 to find a program that will fit your specific needs.
