Accounts Receivable Financing vs Business Loans for the Oil and Gas Industry

Oil Gas Accounts Receivable Financing(AR)What do Texas, Colorado, Oklahoma, West Virginia, Wyoming, and North Dakota have in common? They are six of the top ten fastest-growing states in the country. Also, all of them can name domestic oil and natural gas production as a big part of their success. These states join Alaska and California in fueling our country.

Domestic energy production is making a severe impact on the nation’s economy. Cheaper and more available energy may even help bring back manufacturing jobs to the country. America is returning to our roots by using the resources we have to achieve success. Thomas Edison once wrote, “The reason a lot of people do not recognize opportunity is that it usually goes around wearing overalls looking like hard work.”

Effects of Industry Growth

The growth of these industries is positively changing the business environment. The prosperity is expanding to a massive group of support industries such as water haulers, frac sand haulers, roustabouts, vacuum trucks, environmental cleanup, excavating / dirt work, tank cleaners, pressure washing, component manufacturers, inspection services, flow backtesting, gravel pit suppliers, and rig movers.

All of these providers are experiencing the pros and cons of growth in their companies in a new environment. These operators are excellent at providing support services. They have valuable technical skills. However, they may not be accustomed to the demands of managing cash and business operations during the rapid growth they are experiencing. Success can cause some unexpected challenges, especially when their sales are growing, but their cash seems always to be short. Business owners may find that slowly collected billing is tying up their working capital. Most are not considering having their financing department.

As we have all been told repeatedly, banks are tightening their credit standards due to substantial losses and tighter government regulations. There was even a period of credit freezes. This is happening at the exact time the domestic energy providers and their suppliers have a growing need for cash. Business loans are no longer be a good fit for these companies.

Alternative Options to Business Loans

Paragon Financial provides an alternative to business loans based on the oil and gas suppliers accounts receivable. This means the supplier gets cash immediately without having to wait for the customer to pay. Paragon also works with companies that have IRS issues, client concentration, or startup companies. They are also one of the few factoring companies to provide credit protection reducing the risk for their clients.

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