Oil and Gas Credit Risk Management Services
For a producer or upstream petroleum company, oil and gas credit risk management plays a crucial role.
Due to the nature of the industry and movement of oil and gas around the world, the oil and gas credit manager must think and act globally.
The essential tools of the credit manager include regional, national, and international credit reports. High-level knowledge of credit terms and conditions as well as security agreements are standard requirements.
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Top 3 Credit Hurdles (We’ve Seen) for Oil & Gas Clients
1. Managing International Projects:
Large global producers of oil and gas products have credit departments in many countries and frequently maintain shared services offices in jurisdictions like South America or the Philippines. These shared services offices perform tasks such as credit adjudication and account management.
Managers for oil and gas credit risk management must train the credit staff in remote offices while performing many additional functions.
2. Not Enough Time for Everything:
As with other credit professionals, time is the enemy of the oil and gas credit manager. Many tasks like staff reviews, credit control training, optimizations, new ERP implementations, and approvals, all combine to command most of the waking hours.
It is estimated that over 70% of oil and gas credit risk management time is spent on internal staffing issues.
According to a 2015 study performed by Sageworks, the oil and gas industry is among the top industries that wait the longest to be paid.
3. Retaining Top-Notch Credit Staff:
The vital cash flow management of oil and gas companies is left to credit clerks who are responsible for monitoring the credit terms of customers and following up for prompt payment. Finding and more importantly, retaining excellent quality credit clerks is hard work.
Credit staff churn is why it is becoming more popular to look at credit clerks in offshore offices. Staff in foreign locations tend to stay longer, which reduces the continuous need to hire local talent who tend to take credit clerk jobs until something “better” comes along.
However, credit managers should consider outsourcing portions of the oil and gas credit risk management function to nearshore providers as there are many benefits.
- Firstly all human resources are the provider’s problems.
- Secondly, many are located in the credit managers’ time zone making audit and quality control much more accessible.
- And thirdly, with the volatility of the oil and gas industry, outsourced credit staff can provide greater flexibility and options in the event of a commodity pricing issue.
Choosing credit risk management outsource provider does not need to be a significant undertaking. Reputable providers all maintain the necessary standards, policies, protocols, and data protection services. However, particular attention should be paid to their language capabilities as well as their risk management experience.
About PCM Corp
As a commercial debt collection agency, Priority Credit Management Corp (PCM Corp) has been helping creditors with debt recovery since 2005. PCM Corp can provide the support and tools you need to responsibly collect on debt, improve cash flow, and manage your receivables.
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