How to Manage Oil & Gas Supplier Financial Risk: A Guide for Procurement Teams
- Paula Waggoner-Aguilar
- 5 days ago
- 6 min read
Why Financial Stability is the Foundation of Supply Chain Resilience
In the modern energy and industrial landscape, supply chain resilience is no longer a "nice-to-have"—it is a strategic necessity. While many procurement managers focus on diversifying contractor networks and nearshoring, there is a hidden risk often overlooked: the financial health of the supplier.
One of the key lessons learned from recent geopolitical shifts and labor uncertainties is that a single supplier disruption can halt an entire project. When a service contractor lacks the working capital to scale with your needs, your operations pay the price.
Identifying Financial "Red Flags" in Your Supply Chain
Before a supplier fails, they usually send out warning signals. If you are in procurement, accounts payable, or logistics, watch for these three signs that your contractor needs better financial leadership:
Premature Payment Requests: The supplier frequently asks for payments outside of agreed terms to cover their own payroll or overhead.
Sensitivity to Standard Terms: They decline new business or large orders because they cannot carry the receivables for 45 or 60 days.
Slow-Pay Complaints: Despite your company paying on time, the supplier’s vendors are complaining, indicating a "cash crunch" at the management level.
How a Fractional CFO Strengthens the Energy Supply Chain
Cash Flow Optimization: Ensuring contractors have the liquidity to fulfill large-scale orders.
Working Capital Management: Helping small-to-mid-sized firms secure credit lines to support your growth.
Risk Mitigation: Providing the financial oversight necessary to survive market volatility in the oilfield.
Operational Clarity: Bringing "big company" financial discipline to private family enterprises.
Our CFO Solution:
Utilizing CFO Services can increase supply chain resilience - yours and theirs - by encouraging a healthy and strong financial standing, promoting agility and reliability during times of supply chain disruption.
Regarding costs, it should only require a minor investment of your time and energy. Whereas, in terms of supply chain competitive edge, it not only effectively addresses the present challenges but also significantly strengthens supply chain resilience and boosts your partnerships with suppliers. A true win-win situation.
Supply Chain Resilience Strategies: Fractional CFOs
What's the key strategy here for achieving a resilient supply chain? If they don’t have CFO help already – why not introduce them to a Fractional CFO who can help them strengthen their balance sheet, optimize their cash, and/or raise capital to support the growth of their business (and your business!). A strong balance sheet can help suppliers obtain the cash and capital resources they need to maintain existing stock levels and continue to grow so that they can take on more of your business while mitigating supply chain risks.
To determine if your supplier or contractor has an experienced financial leader, check their website or LinkedIn for a listed CFO. If not, consider introducing them to a reputable CFO services provider to enhance their financial management capabilities, make them more adaptable and resilient when faced with business challenges, and overall success - which also benefits your company.
If CFO services aren't your specialty, consider enlisting your finance team to identify three top Fractional CFO services firms. This list can be a resource for your vendors, fostering collaboration and success in managing supply chain risks. The CFO companies will appreciate the introduction to a potential client.
The Energy CFO, a 12-year old CFO services firm, offers aid to private firms in the oilfield, engineered products, energy and industrial services, energy technology (the hard stuff and the soft stuff), industrial and energy manufacturing sectors. The majority of our clientele derive 30%-50% of their revenue from the energy and industrial realms. Our Fractional CFO and business consultancy services are tailored to these industry niches.
How to Help Your Suppliers And Build Strong Supplier Relationships
How do you go about presenting this proposal? Maybe your discussion could sound something like this:
"Our business frequently interacts with professional CFO services firms that cater to companies like yours. Many suppliers or service contractors choose to outsource their CFO services. These CFO firms offer complimentary consultations that could potentially lead to creative solutions for improving your cash cycle, speeding up collections, or increasing working capital. Are you interested in exploring this further? If so, we can arrange a meeting for introductions and you can independently assess their value."
A Fractional CFO can take charge from that point onward - we navigate introductions like this all the time.
An indirect approach to discussing sensitive topics like finance is often appreciated. Why? Finance can be a real sensitive topic for some individuals. Plus, it allows a Fractional CFOs to step in and effectively take the lead. There may be a simple solution to the common problem you share. Approaching this problem this way not only addresses common issues but also shows the supplier, service contractor, or professional services vendor that your care and you value your business relationship. It also fosters goodwill with professional Fractional CFOs you may not usually interact with.
Fractional CFOs can also provide your supply chain a unique advantage by offering access to their networks in wellsite services, midstream and infrastructure, equipment, engineering, and construction companies that you don't already know. Their networks often consist of small and medium-sized businesses (SMBs) that rely on word-of-mouth referrals rather than advertising.
How CFO Services Benefits Suppliers And You
The Energy CFO team is highly experienced in helping companies improve their financial oversight, streamline operational processes, develop cash management and forecasting strategies, and enhance planning, budgeting, and risk management. These elements are vital for maintaining a profitable and competitive enterprise. Ensuring your supplier has a robust business model and a solid balance sheet enhances their ability to withstand uncertainties and changes. A rising tide lifts all boats, especially in a resilient supply chain.
Business leaders often turn to us for help due to a variety of reasons, such as liquidity issues. They might need financial guidance to redirect their focus to sales or operations, or they might have an intuition that something is not right in their business without pinpointing the exact problem. Furthermore, leadership teams frequently lack the relevant and impactful information needed to derive actionable insights or support decision-making. These common "growing pains" are precisely what we excel in resolving.
Fractional Client Success Stories
Case Study One:
We helped a large, family-operated pipeline and facilities construction and maintenance company optimize their cash management and enhance working capital. This was done to avoid payment difficulties with suppliers and contractors, which affected their liquidity and put a strain on their growth. We implemented tools for managing cash, recommended changes to payment terms, assisted with improving key banking relationships, secured a 50% credit line increase, and recommend guidelines and prioritization for situations when individuals have to make difficult payment decisions.
We expanded our client's bid pricing model, including overlooked costs and updating old cost data. This resulted in mitigating project losses, improving pricing accuracy, and facilitating regular cost structure updates. The changes boosted the client's profitability by over 2% of gross revenues, enhancing their agility and resilience. About 8-10 months after, the client earned customer service awards and saw an influx of new business.
Case Study Two:
We helped an upstream services company overcome growth hurdles by addressing their cash flow issues, crucial for expansion. We introduced a 13-week cash forecast, allowing the company's leadership to accurately predict cash sources and usage in the next quarter. This tool helps anticipate potential operational cash flow shortfalls and proactively alleviate financial strain, preventing unexpected disruptions and ensuring smooth operations.
We also introduced bottom-up budgeting, allowing us to analyze key business drivers and enhance the client's forecasting abilities and financial clarity. This led to identifying 2% of budgeted sales as potential cost savings for reinvestment towards growth targets. Ad-hoc scenario analysis further optimized their workforce to take on additional business. The improved cash and financial foresight will help navigate future challenges and make informed decisions. The client's business has seen significant growth, primarily from existing customers who are happy to give them more new projects!
Fractional CFO Bio
Paula Waggoner-Aguilar is a a highly experienced CFO in both private company and corporate settings. She is also a Texas CPA and the founder and Managing CFO of The Energy CFO and its subsidiary, The Healthcare CFO. With an impressive career spanning more than 25 years in the oil and gas, energy, and industrial sectors, she has played a pivotal role in steering companies through various stages of development, growth, maturation, and transformation.
Fractional CFO Firm
The Energy CFO is a Fractional CFO services firm that specializes in helping private companies and family enterprises involved in all aspects of the energy, oil and gas, chemical, mining value chain. Our CFO team understands the unique challenges businesses in this industry face and is committed to providing tailored solutions designed to take companies to the next level.
Learn more about how our CFO Services can help boost your supplier’s resilience and mitigate risks in your supply chain. A rising tide lifts all boats. Contact us today for a free consultation. We offer affordable fractional CFO services and our client’s results speak for themselves!
A version of this insight was originally featured in Energies Media and Oilwoman Magazine in January-February 2023. This post has been updated with new strategies for 2026 supply chain challenges.
