How to Finance Your Growing Oilfield Transportation Company

Posted in: Freight Factoring News- Jul 23, 2013 No Comments

ND Drilling rig

The Oilfield Transportation industry plays an important role as the backbone of the oilfield economy. Even in recessionary times, many companies in this oilfield industry can do very well if managed properly. One of the main challenges of oilfield transportation though is that it can be very cash intensive. Oilfield Trucking and logistics companies have to pay for drivers, trucks, repairs and fuel. All of these expenses tend to add up very quickly. To make matters worse, most shippers don’t pay on their invoices for 30-90 days. This creates a cash flow problem for many companies since they have immediate expenses but a delayed income.

If the company has a large working capital reserve, this cash flow is not a problem. This is rarely the case though and most oilfield transportation companies try to get traditional business financing to help them grow. Although business loans and other forms of financing are available to large companies, small companies don’t usually qualify for these traditional lines of credit or loans.

The best alternative solution to this problem that works very well is freight invoice factoring. It eliminates the payment wait and provides you with the cash flow to pay your business expenses and even grow your company. This gives you the necessary breathing room to pay expenses while you are waiting 30-90 days for your clients to pay their invoices.

Transfac Capital Oilfield Transportation Factoring is relatively easy to obtain, because of how the transaction is structured. Transfac Capital doesn’t lend money per se. Rather we buy your invoice at a small discount, providing an upfront payment. You usually get around 90% (this varies) upfront, and the remainder 10% (less the discount) once your client pays. Since the transaction is structured as a purchase rather than a business loan, the criteria for qualifying are different. For example, since Transfac Capital is actually buying your invoices from you, their biggest concern is the credit worthiness of your client. This means that small companies with a good list of clients can usually get this form of Oilfield Transportation business financing.