Maintaining Cash Flow When Oil Prices Are Low

The oil and gas industry often faces ups and downs.  Sudden drops in oil prices, geopolitical shifts, and market saturation can all disrupt financial stability. For upstream and downstream companies alike, price-per-barrel volatility creates immediate concerns around working capital and meeting payroll, especially for smaller operators and oilfield contractors who rely on consistent cash flow to stay in business.

When oil prices fall, getting bank loans can be difficult or slow to secure. Invoice factoring can be a vital solution, particularly for oil and gas companies.

Why Low Oil Prices Create a Cash Flow Problem

Additionally, project delays can mean that invoices are paid 30, 60, or even 90 days after services are provided. Meanwhile, businesses still have to pay for operations and fulfill contractor agreements.

What Is Oilfield Invoice Factoring?

Benefits of Factoring for Oil & Gas Contractors

1. Better Cash Flow: Factoring gives energy companies immediate cash without increasing debt. This cash can cover salaries, buy supplies, and keep operations running, even during payment delays.
2. Quick and Flexible Funding: Factoring companies usually approve funding quickly, often within days, which is essential when contractor payments are late or project schedules change.
3. Protection from Market Changes: When oil prices fluctuate, having a reliable, non-loan funding option helps maintain financial stability. Invoice factoring provides a buffer, allowing companies to keep operating without taking on high-interest loans.
4. More Focus on Growth: Factoring partners often manage accounts receivable, so energy companies can concentrate on fulfilling contracts and winning new projects rather than chasing overdue payments.

Who Uses Oil and Gas Factoring?

• Independent oilfield contractors
• Equipment rental providers
• Transportation and logistics companies
• Environmental services
• Maintenance and inspection teams

How Scale Funding Helped an Oilfield Service Company

A Texas-based oilfield services company turned to Scale Funding when a sudden drop in oil prices led several clients to delay payments, leaving over $600,000 in outstanding invoices. Unable to access traditional credit fast enough, they used Scale’s invoice factoring services to receive 90% of their receivables within 24 hours. This immediate cash flow allowed them to meet payroll, pay subcontractors, and secure a new contract without additional debt.

Conclusion

Low oil prices don’t have to mean disaster. With the right financial tools, like invoice factoring, energy companies can handle market changes, keep cash flow healthy, and seize growth opportunities. Whether you are a service provider, subcontractor, or field operator, partnering with Scale Funding, an oilfield factoring company, can make a big difference when times are tough.