We interview Hari, Tan & Sandro with Industry Avenue and learn about Treasury issues inside the oil and gas service companies. To learn more about them, hit their website at industryavenue.com or call Hari direct at 832.746.7431
Mark: Hey, folks. Let’s learn something new about the oil and gas industry.
All right, folks we’re sitting in Nirvana Restaurant in beautiful Houston, Texas. We just had a great meal. I’m here with Hari, Tan and Sandrano – Sandro, excuse me with Industry Avenue Technologies. And we’re going to talk a little bit about something that we were talking about over lunch and I didn’t even know this is going on in the industry.
But evidently the big companies in the last twenty or thirty years had to really look at their financial situations because they operate globally and they need to look at their cash reserves and the way they handle their money differently in each country to maximize their profitability and even their shareholder value.
And after talking to these guys during lunch we came and find out that this is also going on here in North America with a lot of the smaller operating companies, the service companies in particular that just a few years ago was a two million shop and they had one truck and they did their accounting in a checkbook.
Well, now the small service companies that serviced these frack fields is now a hundred million dollar a year business and they have, you know, thirty seven employees and they have payroll issues and the CFO is struggling with how to modernize his business especially when he start looking at operating globally.
So, Tan we’re going to start with you. You know I read off a bunch of stuff, you want to kind of comment on some of your experience in working with the service companies and how they need to modernize their treasury?
Tan: Sure. When we first started at Industry Avenue fifteen years ago, one of our first clients happen to be one of the largest oilfield services company out there. And fifteen years ago, I guess they were around $5 billion company or $10 billion company and they’ve grown, you know fourfold by now.
But, they were having the same growth issues the globalization issues with the currency exchange and what not and transitioning from a product lines company to geographical company. We came in there with actually Sandro right here, former treasurer at that company to help modernize and streamline their needs and we see the same things happening now as more mid-tier companies are going through the same growing pains as well.
Mark: Thank you. So, Sandro let me go to you. So you actually worked in the business. Can you talk a little bit about how this actually affects the business if you don’t have a handle on the treasury components?
Sandro: Sure. As companies expand overseas and they have to deal with all the – all the issues of cash repatriation and funding of the operations DSO and so on. If they don’t have a good handle on that they can run into problems with everywhere from fraud to having to use a tremendous amount of cash and debt and funding that the company could use to grow much more faster, but now are limited by a number of factors cash being one of the most important ones.
Mark: So, if you don’t have your hands wrapped around your finances on a company, it really impacts the business in a negative way or in a positive way?
Sandro: In a – absolutely in a negative way especially some of way you talk about DSO for example in the U.S. I mean a lot of companies have promise with DSO and we can help them solve some of those issues and bring the DSO down and try to get some cash out of their business directly.
But for companies that are growing beyond that point and that they are expanding overseas, then their problems are compounded by things like having to deal with economic systems and exchange controls in other countries. So, in that case, it’s not only DSO but then you’re dealing with political issues of the country, economic issues in the country.
And many, many times because of local content that a service company sometimes have to go through and comply with, they have sometimes a lot of cash stock in countries and stock overseas that is very — sometimes very hard to bring back to the U.S. where the money is safe in dollars and protected.
And putting up all those systems is key to making sure that, you know, when we talk about getting a good handle on your finances and that’s kind of what we’re talking about.
Mark: Yeah. As a small business owner myself, I can tell you right now that cash flow has driven many people out of business who were profitable, right? Something that we struggle with a lot at Modal Point and beginning – now we’re in a place now where we don’t struggle with it and we’re glad we’re not struggling with it anymore.
So, Hari, I’m going to ask you a quick question. If somebody want to learn more about your organization get in touch with you, what was the best way for them to do it?
Hari: Well, they could either go to our website at www.indsustryavenue.com or call me. I’m the President and CEO of Industry Avenue. My number is 832-746-7431. And as somebody who has managed and driven treasury services for my clients for the past fourteen years, I’m available 24/7.
Mark: All right, folks. So quit writing notes, I’ll put a link in the show notes both to Hari’s website and we’ll also stick his phone number up. Harry, you may be getting some strange phone calls because my audience is kind of out there sometimes.
So hopefully folks this helps you learn something new about the oil and gas industry. I definitely have learned a lot during this lunch. We will see you next time.