Just as a slow drip of water from a leaky faucet can end up costing you hundreds of dollars each year, the slightest leak in your business can end up costing you thousands of dollars. In the oilfield industry, this is especially true as many businesses lose money without realizing it until it’s too late. That’s why it’s important to recognize the most common causes of cash leaks to help prevent them before they cause your business to go under.
Paying for Unnecessary Services
Businesses in the oilfield industry rely heavily upon suppliers, technologies, tools, and equipment to run their operations. Furthermore, most business owners rely on third parties for these things and pay the associated fees they charge. While it’s important to pay for the things your business needs in order to function and grow, it’s equally important to cut out the features and services you don’t need or use.
To do this, it’s important to keep track of the money you spend and where it goes by making a monthly cash-flow chart. Doing so will help you analyze the needs of your business and compare them to the services and equipment you pay for. This will allow you to see which services you may have once needed but don’t anymore or the services you’ve never used but are still paying for. Without regular analysis, these kinds of fees can go unnoticed and end up costing you a lot of unnecessary money.
Overlook Poor Productivity
In the oilfield industry, poor productivity is a silent killer of businesses like water haulers, rig movers, welders, sandblasters, and more. That’s why it’s important to be proactive about your operations by encouraging good organization and proficient work. Figure out what you can do to better facilitate optimal productivity such as offering more flexible schedules or investing in better equipment. Furthermore, changing your workflow to increase the number of tasks a team can complete during a specific time frame can help save considerable cash in the long run.
If productivity is lacking, don’t assume there’s nothing you can do about it. Take the time to analyze the situation to determine the source of lost productivity. Perhaps your workers need updated equipment to get a job done faster. Or maybe, the technology your office uses needs to be upgraded to reduce lag-time and inefficient operations. There may be new systems and equipment that will optimize your workforce, thus eliminating human error that may be slowly draining your business of money.
Failing to Optimize Your Workforce
Never take for granted the fact that your employees are what keep your business running. However, they can also be a source of hidden cash leaks. Employee retention, for example, can take a large chunk out of your annual budget if you have high turnover and find yourself hiring and training someone new on a regular basis. Wrong position employees can also contribute to unnecessary cash leaks because inefficiency can waste significant resources. You also don’t want to pay for outsourcing tasks that you can do in-house.
Furthermore, micromanaging your company can also create cash leaks if you’re wasting valuable time that would be more cost-effective if you let employees do their jobs. That’s why it’s important to review your hiring and retention practices to ensure your employees have the knowledge, training, and experience to be successful. Doing so will ensure the operations of your business to make sure you’re not leaking cash without realizing it.
Oilfield Factoring
At Oilfield Factoring, we understand that the most important aspect of running your business is cash flow. It takes a concentrated effort along with well-planned execution to ensure you have the money you need without wasting it on things you don’t. That’s why it’s important to follow the suggestions mentioned above to keep your business running at peak efficiency.
Oilfield Factoring is a leading provider of invoice factoring services in the oilfield industry. We provide invoice factoring services and access to immediate cash. This ensures oilfield service companies are able to meet payroll, manage equipment, and take on new opportunities for growth. For more information about the services we provide, contact us at 1.866.834.7338 today.
