Petrochem Field Services Takes Control of Cash Flow With C2FO

When Petrochem Chief Financial Officer Jack Leal first heard about the ExxonMobil Early Payment Program through C2FO, it sounded too good to be true.

“We thought we were getting scammed,” he said.

Jack became a believer after experiencing the ease of receiving early payment on invoices through C2FO’s platform. The funding process contained none of the paperwork and third-party hassles of invoice factoring.

Taking care of employees

Many companies say that, “people are our greatest resource.” But for a service provider like Petrochem, that statement is more than a cliché.

More than 90% of Petrochem’s cost of doing business is labor. Based outside of Houston, Petrochem’s workers maintain and repair distillation towers for major petrochemical refinery clients like Shell Oil and ExxonMobil.

The company serves clients across the United States, as well as in countries like Venezuela, Malaysia and Canada.

Much of Petrochem’s work is seasonal. Pay terms among customers can vary greatly. Generating cash flow to meet labor costs throughout the year is a top financial challenge for the 29-year-old Texas company.

“We’re taking care of our employees, who get paid weekly, while our customer base is typically paying 30 to as far as 75 days out,” Jack said. “Bridging that gap is probably one of the biggest challenges in trying to establish proper cash flow management.”

An easier way to build cash flow

Throughout its history, Petrochem has used a blend of traditional credit lines and invoice factoring to maintain cash flow.

A letter from ExxonMobil—which represents 35% of Petrochem’s project work—encouraged Jack to try the ExxonMobil Early Payment Program by activating Petrochem’s account on the C2FO platform.

Jack believed the early payment program could be another financial tool to help Petrochem address overhead and keep pace with its growing customer demand.

After requesting early payment on a few invoices, Jack’s team soon saw the platform’s advantages. Unlike factoring, there is no selling of invoices to a third party and Petrochem can determine the APR on its receivables. Unlike a bank line of credit, there are no financial covenants or reporting.

“It was truly an algorithm that’s happening right there in front of you that basically says, ‘Okay, make an offer and if the marketplace supports your offer, you’re done,” Jack said. “I thought, ‘Wow, what a godsend. What a great help for us.’”

A great solution

Today, Petrochem uses C2FO throughout the year as new ExxonMobil projects come up. In addition to helping build working capital, the reliability of having every invoice paid early allows Jack’s finance team to perform more cash flow budgeting and forecasting.

Using C2FO also provides leverage in negotiations with Petrochem’s other financial providers, Jack said.

Most importantly, the cash flow generated through early invoice payments helps Petrochem respond to new projects quickly and relieves some of the pressure on employee payroll.

“If they’re not doing well, we’re not going to be doing well as a company ourselves. So that is very important to us,” Jack said.

Humble beginnings, impressive growth

Founded by Sergio Sanchez and Howard Smith in 1990, Petrochem started in a small warehouse in the Houston suburb of Humble, Texas.

Its founders, who still lead the company, envisioned Petrochem as a one-stop solution for tower and vessel maintenance in the petrochemical refinery industry. The company’s high safety and quality standards have fueled its impressive growth.

Petrochem today is a service provider for several Fortune 100 customers like ExxonMobile, Shell Oil and ConocoPhillips. Primarily tied to the oil industry, Petrochem has served other businesses as well, including sugar mills.

“Basically, if there’s a refining process involved, we can work with you,” Jack said.

Learn more about Petrochem here.