Access to working capital is essential to the success of oil and natural gas distributors. However, many oil and gas distributors have a good portion of their capital tied up in unpaid receivables. Fortunately, there is a way to catch up on unsettled customer accounts, improve cash flow, and build up capital to grow into new markets.
The Relationship between Overhead Costs and Receivables
Oil and Gas distributors have a number of overhead costs to keep balanced. Employees, facilities, storage, equipment, transportation, marketing, the product itself, and more all need to be paid for to keep operations moving. In order to cover those costs, oil and gas distributors rely on regular payments from their customers. Since the standard business practice is to issue invoices with staggered payment schedules of 30 days or more, oil and gas distributors can find themselves waiting upwards of a month before they see revenue. In the meantime, the aforementioned overhead expenses keep growing.
Improving the Rate of Revenue
Accounts receivable factoring is widely used by oil and gas distributors as a means of improving cash flow and minimizing the waiting period to access capital. Accounts receivable factoring allows distributors to turn receivables into cash within 24 hours, which makes it much easier to cover overhead expenses and build up the capital necessary to grow into new markets. Oil and natural gas distributors do not need to enter any contracts or deal with extra fees, and they can choose which receivables get factored. The fast turnaround on unpaid invoices helps oil and gas distributors get more control over their finances and reduce their reliance on debt-based loans to overcome cash flow issues.
Serving the Oil and Gas Industry
New Century Financial provides comprehensive accounts receivable factoring solutions to oil and gas distributors of all sizes. Whether you sell to merchants, retailers, contractors, industrial, or commercial users, our team will work with you to create a distribution factoring strategy tailored to your needs. Contact our team today to get started.