BlueVine floats cash to small businesses & freelancers when clients take too long to pay

Small businesses and freelancers have one major problem in common: Clients often take too long to pay their invoices. This is the cash flow crisis BlueVine has just raised $4 million to fix.

An entire industry already exists to solve the problem of unpaid invoices for small businesses. Many firms, such as Dash Point, provide a service called “small business factoring,” in which they buy up unpaid invoices ahead of time and offer small businesses an advance. It’s kind of like a loan.

But BlueVine claims companies like Dash Point operate like the ancients: they apparently take weeks to onboard clients and often don’t have a Web presence at all. BlueVine wants to automate the process and bring it online. To make that happen, the company has raised capital from Lightspeed Venture Partners, Greylock IL, Correlation Ventures, Kreos Capital, Kima Ventures, and unnamed angel investors, BlueVine told VentureBeat today.

Although BlueVine currently operates in private beta mode, the company claims that when it launches to the public — in three to four weeks — it will take minutes to sign up, connect your accounting software, and request payment. As long as the request is approved, BlueVine says it will pay up 85 percent of the invoice immediately and will pay the remaining funds after the invoice is paid by the client, minus a 1 percent fee per week.

Systems such as small business factoring aren’t perfect. For small businesses, this service competes with traditional loans and even credit cards. It’s a solution most successful small businesses and sole proprietors will not need if they’re already operating successfully and have enough capital on-hand. Still, BlueVine believes it has the potential to make small business factoring mainstream — if it can take away all of the pain points.