CASE STUDY:
Invoice Factoring for an Oilfield Service Company
Client Overview
Company: First Services Group
Location: Houston, TX
Industry: Service Provider
Annual Revenue: $8M
Background
First Services Group is an oil & gas field service provider serving the Haynesville and Permian Basins, providing water hauling, frac sand, and labor support services.
Challenges
- Slow Payment: Recognized payment terms in the oil & gas industry are between 90-120 days.
- Large Daily Cash Needs: Payroll, insurance, fuel, equipment maintenance/repair.
- Tax Lien: The company was in arrears on 941 for prior periods with pending IRS action without intervention.
Solution
First Services Group was introduced to Gateway Commercial Finance via their banker. Factoring is very common in the oil & gas space, and Gateway was familiar with the services First Services Group provided and had positive previous experiences with their customers.
Factoring Process
- Invoice Submission: First Services submitted invoices to Gateway daily—a large number of field tickets for deliveries made daily funding a necessity.
- Advance Funding: Within 24 hours from submission, First Services received an (85%) advance on their invoices.
- Balance Payment: Once the customers paid the invoices, Gateway released the remaining 15% (minus a small factoring fee).
Results & Impact after 180 days
“Gateway saved our businesses. They’re experienced in our space, understood our challenges, knew how to organize our cash, and helped us with the IRS.” — Miller R. Ortega, Founder/CEO of First Services Group
- Reliable Cash Flow: Immediately, First Services was flush with cash. Covering daily expenses was eliminated within the first two weeks.
- Building Credit. Fuel companies gradually increased First Services’ credit due to timely payments on the fuel cards.
- IRS Installment Plan: With cash flow steady, the IRS was willing to enter into an Installment Agreement without filing a lien.
Conclusion
First Service is a perfect candidate for factoring. Slow payment terms and high daily cash demands can pose challenges for the most financially sound company. Factoring is ideal to ensure day-to-day cash flow is reliably delivered while allowing a business to focus on running the show.
Learn more about this service
Contact a Decision-Maker Today:
Don’t let cash flow issues hold you back. Call 1-855-424-2955 to speak with a manager and learn how factoring can help your service business succeed.