"In this industry, it's not about how much you make, it's about how much you keep".
After many years of providing software solutions and working closely with oilfield product and service companies, Jory Lamb has seen it all. As President and CEO of VistaVu Solutions, he’s observed that many otherwise well-run companies make the same operational mistakes over and over again. He calls these the Seven Deadly Sins of Oilfield Service Companies.
In this 7-part blog series, we’re sharing Lamb's advice on how to keep more of what you make.
The 4th Deadly Sin: Poor Billing Practices
The sooner you can get an invoice to your customer, the sooner you are likely to be paid. Just as important, your invoice needs to fully account for every dollar you’re billing with appropriate and well-organized documentation – such as AFE numbers, well names or signed approvals from well site supervisors. Otherwise, the customer may toss your invoice into the ‘problem pile’, where it could sit for weeks or months.
As a recent example of this with one of VistaVu’s clients, by reducing their billing from 21 days out the door to 7 days – at a 6% interest rate, they projected they saved $45,000 just based on the cost of cash alone, which could possibly be doubled in banking service fees from using less of their operating line.
Says Lamb: “If it takes three weeks to get an invoice out the door, and three months to get paid because your documentation was poor, your business will suffer. A fully documented invoice in seven days is necessary and very achievable.”
