Last Updated on September 13, 2021
In the United States, the oil and gas industry is in a unique situation. On one hand, it is experiencing massive increases in production and demand from today’s new technological and innovative advancements, leading to increased margins. However, intense competition within a dense market of suppliers causes low prices, often resulting in a cash crunch that forces companies to look toward cash flow financing solutions.
One of the best solutions for the oil and gas industry is small business factoring. altLINE and The Southern Bank have been helping customers improve cash flow since 1936. Because we’re a bank, not an independent factoring company like most others, we cut out the middle man. Our factoring services are more trusted, more affordable and all backed by the FDIC. We understand the unique challenges that face the oil and gas industry, and we’re prepared to help you meet your growing cash flow demands.
What is Factoring for Oil and Gas?
Invoice factoring is a unique financing tool for oil and gas companies. Factoring is the process of selling your receivables to a factoring company (also known as “factor companies“) in exchange for cash up front. The factor typically advances between 80-90% of the total invoice value. Once the invoice is paid by your oil and gas customer, the factor will release the remainder to your business, minus a small factoring fee (typically 1-5%).
Why Factoring Works Well for the Oil and Gas Industry
Oil and gas companies often have extremely high receivables at any one point. Their customers are generally large businesses with strong payment histories. This is ideal from a factoring company’s standpoint – it means your customers are likely to pay their invoices on time.
On top of that, oil and gas companies deal with long payment terms, increased production demand, and frequent payroll deadlines. This strains many oil and gas companies who must operate with limited cash flow at their disposal. Some struggle or fail to stay afloat without sufficient and affordable financing. Invoice factoring allows oil and gas businesses to extract cash immediately from their receivables, dramatically shortening the payment cycle.
What makes oil and gas factoring different from traditional bank financing?
Unlike a traditional bank loan, invoice factoring for apparel companies is not a loan at all. Its the sale of an asset (your outstanding invoices) in exchange for cash. That means it will not count against your credit rating. The minimum requirements are more accessible for this type of financing, allowing businesses with limited operating history, lower credit scores or few assets to borrow against.
What are the benefits of factoring with altLINE?
We’re top-ranked by Investopedia, TheBalanceSMB, Business.com, Fundera and Merchant Maverick. Why do they rank us so well?
Our services are competitive:
- Rates from 0.50%
- Advances up to 90%
- No Application Fee
- No Hidden Fees (Ever)
- Fast Approval
- Local Customer Service
Our track record is strong:
- In Business Since 1936
- Over $600 Million in Funded Invoices
- We’re a trusted community bank (and a factoring bank)
Want to find out if factoring is a good fit for your oil and gas company?
If your business is short on cash, but have lots of outstanding invoices, you might be a fit. To get a free quote, apply here or call (205) 607-0811 to speak with a sales representative today. We look forward to helping you grow.
Jim is the General Manager of altLINE by The Southern Bank. altLINE partners with lenders nationwide to provide invoice factoring and accounts receivable financing to their small and medium-sized business customers. altLINE is a direct bank lender and a division of The Southern Bank Company, a community bank originally founded in 1936.