Product: Factoring Line
Funding Line Amount: $2 million
Company Type: Specialized Chemical Products for Oil Drilling and Wells
Industry Type: Oil and Gas
Annual Revenue: $9.5 million
Our client has over two decades of experience, specializing in the supply of chemical products for drilling, completion and repair of oil wells in Mexico. The Mexican oil industry saw a 6% drop in production in 2018 vs. 2017. However, 2019 and the years that follow are projected to be stronger due to the implementation of energy reform, which is expected to increase oil and gas production, grow employment and improve the industry’s technological progress. The Mexican government’s goal is to increase oil production by an additional 1,000,000 barrels per day by 2024.
In order to remain competitive and leverage the increasing demand for its products, our client has had to offer terms substantially longer than normal and has experienced a marked increase in its accounts receivable. Moreover, the company will need extra working capital in order to fulfill a recent contract win. The client approached ExpoCredit looking for help to bridge the gap between payments so that they could keep up with growing demand.
The company has been in operation for over 20 years. It expects a strong performance in 2019 and beyond based on the positive outlook of the oil industry as a whole. Its main debtors are well-established multinational companies based in Mexico. Because of the positive perspective on the Mexican oil industry over the next few years and the fact that the company has a history of strong sales and profit performance, ExpoCredit decided to approve the factoring line request.
With ExpoCredit’s help, the company will now be able to take advantage of the positive industry outlook and continue to grow its business without worrying about its lengthy payment terms.
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