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MIDLAND, Texas, Sept. 24, 2019 (GLOBE NEWSWIRE) -- Seeing the need to help energy companies improve cash flow, longtime energy entrepreneur Tripp Wommack has founded Velocity Financial.
Explaining the reason for founding the company, Wommack says, “Velocity was founded with our oilfield neighbors in mind, and we plan to be the premier oilfield service factoring company in the industry.”
Over a 30-plus year career, Wommack has founded numerous companies including Southwest Royalties, Basic Energy Services and, more recently, Warrior Technologies and Anchor Resources, among many others.
“Having a long history in the oilfield service sector, I’ve seen the financing challenges service companies face,” Wommack says. “Bank loans, private equity capital and other funding methods have their pluses and minuses, and factoring can be a more freeing option than any other.”
Briefly, factoring works as follows: Clients receive immediate cash by selling their invoices to Velocity, minus a fee. Velocity then collects the money from the payer, usually over a period of up to 90 days.
Their oil patch history and proximity creates an advantage over competitors in distant financial centers like New York or Chicago.
To manage Velocity’s day-to-day operations, Wommack has onboarded Justin Ryan as Senior Vice President-Underwriting and Credit and Irene Hinojos as Senior Vice President-Operations and Compliance.
“Factoring is different from traditional banking and financing in that it’s flexible. We can think outside the box to help our clients,” said Hinojos. “Sometimes those clients would not qualify for other options due to being a startup with no credit history or assets to use as collateral. We can work with someone who’s just started up this month, or whose credit score does not meet traditional banking standards.”
There is still due diligence in the vetting process, but it involves evaluating a potential client’s billing practices, the quality of their customers—are those customers known for reliably paying within 90 days—and other factors.
Often, startups become longtime clients after getting factoring help for the rapid growth periods typical during the first months or years of business.
Hinojos and Ryan point out that speeding invoice payment allows clients to make payroll, buy supplies, or, for older companies, to fund the purchase of additional equipment to supply growth—without involving bank loans or private equity.
For Ryan, Velocity’s assistance goes beyond transferring some dollars into an account, as helpful as that is by itself. For example, “We get to help our clients get a big new job and they may not have the funds to cover their up-front costs—but they have the invoices to show the money is coming in, just not yet. We let them avoid taking out a loan or taking on an equity partner—both of which are long-term commitments.” They also sometimes advise on billing procedure improvements and other accounting workflow issues.
Although anchored in the Permian Basin, Velocity helps clients in all US oil basins and in other industries.
Contact: Irene Hinojos
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/59756814-a1b5-425d-96c8-507ce82d4183