In the oil and gas industry, long payment cycles can put serious pressure on your cash flow. Waiting 30, 60 or even 90 days to get paid can make it difficult to cover payroll, fuel, repairs and day-to-day operating costs. For many oilfield service companies, this cash flow gap can slow growth or even stall operations.

Oilfield factoring allows you to turn unpaid invoices into immediate working capital by selling these invoices to an oilfield factoring company. Instead of waiting weeks or months for payment, you receive fast access to cash, and the factoring company manages collections for you.

In this article, we’ll break down how oilfield factoring works, explain each step of the process and show how partnering with an experienced oilfield factoring company can help keep your business moving in today’s demanding market.

How Oilfield Factoring Works

The goal of oilfield factoring is simple: to support the unique demands of the energy sector. 

Here’s how the factoring process typically works:

Step 1: You Provide Services & Generate an Invoice

Once you complete a job — whether it’s drilling support, pipeline construction, water hauling or equipment rental — you issue an invoice to your customer as usual. This invoice represents money owed for work already completed.

Step 2: Submit Invoice to Your Factoring Company

Instead of waiting for your customer to pay, you also submit the invoice to your oilfield factoring company. Then, they review and verify the invoice, focusing on the creditworthiness of your customer and not your business’s credit history.

Step 3: Receive Advance Funding from Your Factoring Company

After approval, you receive an advance on your invoice. This funding is typically available within one business day, giving you immediate access to cash when your company needs it most.

Step 4: Your Factoring Company Handles Collections

Your factoring company takes over the payment process, working directly with your customer to collect on the invoice. Once the customer pays in full, you receive the remaining balance minus a small factoring fee.

Benefits: What Can Oil & Gas Companies Do With Factoring Funds?

Access to immediate working capital can transform how your oilfield business operates. With oilfield factoring, you’re no longer held back by slow-paying customers.

Here are some specific ways you can use oil and gas factoring funds:

• Keep Operations Running Smoothly: Maintain steady cash flow to pay crews on time, fuel vehicles, service equipment and cover every day operating expenses without relying on loans.
• Take on More Jobs: With predictable cash flow, you can confidently accept new contracts and larger projects, even if customers have extended payment terms.
• Invest in Growth: Use factoring funds to purchase new equipment, upgrade technology, expand your fleet or invest in research and development to keep your business competitive.
• Avoid Debt and Credit Limitations: Unlike traditional loans, invoice factoring doesn’t add debt to your balance sheet and doesn’t rely heavily on your credit score.

Ultimately, knowing that your cash flow is stable allows you to focus less on payroll gaps or chasing payments and more on running your business.

Work With RTS for Oilfield Factoring

RTS works with a wide range of oilfield and gas-related businesses, including:

• Pipeline Construction Firms
• Frac Service Companies
• Sand & Water Hauler Fleets
• Rig Movers
• Coil Tubing Operators
• Roustabout Crews
• Hot Oilers
• Vacuum Truck Operators
• And more!

We understand the challenges of the oil and gas industry and tailor our oilfield factoring solutions to keep your business funded, flexible and moving forward.

Ready to stop waiting on payments and start putting your invoices to work? Contact RTS today to learn how oilfield factoring can support your operations and fuel your growth.