Factoring Services
Factoring Services My business is starting to pick up but like most oil field companies we get paid on a 30-90day period. I was looking to get some quick cash to help move a bit. Anybody work for or have experience with any factoring companies? Looking to factor for about 6 months and only with one of the companies I work for. Thanks in advance.
Teching In
Joined: Oct 2015
Posts: 34
Likes: 0
From: Midland, TX
I've seen maaaaany people/companies get burned by factoring companies. If you can avoid using them I would HIGHLY recommend doing so. I know a lot of them advertise low rates etc. but you will ALWAYS pay more than you think you will in hidden fees and the like. If you have any way to make it through that initial 30-90 day period I would highly recommend doing so, it could be a big difference in your net in a time where I'm sure it's already tight given the current rates vac trucks are fetching.
Yeah, I've been trying to stay away from using them and am trying to find ppl that have had descent stories with a company. The problem is I'm not just working vac trucks, I'm also doing repairs on pulling units so buying parts is draining my wallet. The return is big because I mark the parts up but that company takes a bit longer to pay.
Teching In
Joined: Oct 2015
Posts: 34
Likes: 0
From: Midland, TX
If your margins are good on the work then you'll probably be fine if you only use factoring for the 30-90 days. Just know that if the company you're doing work for decides to not pay the factoring co will come at you for recourse and you may not even know they haven't been collecting for 4-6 weeks. Creates a big hole to try and climb out of for some companies. Regardless of advertised rates I'd plan on the true cost of the service to be at least 5 and possibly up to 10% when it's all said and done. Food for thought.
Offer your customers discount terms for paying faster. Something like 3% within 10 days, 1 % within 20 days or net (full amount) within 30 days. I don't know what factoring company will charge you but expect it is more than 3% and if you give your customer an incentive to pay faster they should want to take advantage of it (assuming they have the money to pay in the first place).
