The energy industry has been experiencing some tremendous growth for the last few years. The growth has been driven by the ever-increasing demand for the oil and associated products. The expansion of the population in various parts of the world has put the pressure on the various firms that operate the sales and distributions operations. To contain the increase in demand, sales have to be increased too. Some are being done on credit and debt terms. This is why the oil field collections and associated agencies are in high demand.
The demand and supply forces have a lot of influence on what is consumed and the amounts that are likely to be consumed. The shifts in both the demand and the supply means the firms in the industry have o know what is best for the industry. Supplies may need to be increase. Increase in the associated costs means that they have to increase by proportionate amounts.
Special relationships exist between the different players in the markets. The producers supply their products to a certain group of supplies and distributors. The supplies are mainly supplied after special orders have been drafted and forwarded to the suppliers. Payments are organized later especially after the products have been delivered. This means that the special relationships guide the level of trusts. This in turn affects how the payments are made.
For new clients, the suppliers have to undertake special financial evaluations. These are based on the records available. The records are used as a basis of gauging their ability to repay the loans and the amounts due. The evaluations help reduce the risks that could be associated with making of losses as a result of a bad debt. Credit worthiness is therefore very important for new relationships.
The current obligations have to be taken into consideration too. This means that firms which are servicing ongoing credits rarely get further credits. The information about the obligations is mined from the files held by various financial institutions. The records are shared among the players in the financial industry. The credit services may be cancelled. In other cases, they are deferred till the current obligations have been settled.
The customer and the supplier usually use the lawyers to negotiate the various trading terms. The business and corporate lawyers enter into contracts on their behalf. The contracts are legally acceptable to both parties. If any of the parties falls short of the expectations, they may get fined or the contract is terminated.
The credit period is split into a series of smaller terms. The loan or a credit scheme specifies what is to be paid at a specified date. The various obligations are also split between the two parties in an agreement. This is what seals the deal.
Default in the payments could attract a fine or interest depending on the severity. The terms of the contracts specifies what is to be done in each case. If the customers continually default on the payments, the supplier may sue them. The clients may be required to settle all the amounts due in such cases.
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