A young Midland company is utilizing a financing method that reaches back to ancient times to help clients generate cash flow. Oil industry veteran Tripp Wommack founded Velocity Financial in early 2019 as a factoring company to give clients financial flexibility. Factoring involves a company – in this case Velocity – buying invoices from clients for a fee. Velocity will then collect the money owed on the invoices.
“There’s still a lot of people who don’t know factoring is still going on,” said Irene Hinojos, senior vice president, operations and compliance, in a phone interview. As the industry’s economic gloom as deepened, she said the business has received more inquiries as they seek to close what she called a cash flow gap. Typically, when an invoice is sent, the company has to wait up to 60 days to receive payment, she explained. “Expenses still happen,” she said.Instead of waiting that 60 days – or longer – selling their invoices to Velocity gives them cash flow, she said.
Among its other services, Velocity is helping clients prepare for the changes in the economy. “We want to be prepared, and we want our clients to be prepared, for any major changes, whether it’s declining credit or pending bankruptcies,” Hinojos said. Justin Ryan, senior vice president, underwriting and credit, said they have seen a few bankruptcies already. Any additional bankruptcies will “depend on how oil recovers.”
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