When you need cash but your customers have not paid you yet, you may need to turn to invoice factoring, which can be used to get an advance on outstanding invoices. This is sometimes referred to as accounts receivable financing, and it is one of the two major services offered by BlueVine. This is our BlueVine review.
What is invoice factoring? BlueVine defines it as a financial transaction in which a "business sells its invoices at a discount to an external financing company, known as a factor or factoring company. Factoring companies typically advance 70 to 90 percent of the invoice value upfront. The remaining balance is remitted when the invoice is paid minus a fee."
How do factoring companies work? There are three parts to a factoring transaction:
The business is the invoice issuer, the customer is the one who owes payment on the invoice, and the factoring company provides the money. It is up to the business owner to decide which factoring company he or she wants to work with. Then, they can proceed to sell their invoices to the factoring company of their choice for "working capital." Once the invoice has been verified, the factor pays the business 70-90 percent of the check. Finally, when the business owner pays the invoice, the factoring company pays them the rest of the invoice.
How is invoice factoring different from bank loans? The difference between borrowing and invoice factoring is that your company can immediately change its receivables into cash. This way, you will not have to wait up to 90 days for your customers to make a payment.
Invoice factoring is a good choice for companies that need cash fast but cannot obtain a bank loan. It is also referred to as invoice discounting, debtor financing, and receivables factoring. Factoring companies will look into the credit history of the business's customers before buying the invoices. They want to make sure the company is responsible for its payments. It is important to understand the way invoice factoring works if you're going to incorporate extra cash into your business without incurring more debt.
Before we get into our feature-by-feature breakdown of the product, let us take a look at what BlueVine offers:
Those are the best features and the main selling points for the product. However, this is not all that BlueVine offers.
BlueVine syncs with your invoicing software and makes it easy to pick and choose the invoices you want to fund. Unlike other factoring services, BlueVine advertises "no reserves, no minimums," which means there are no reserve or volume requirements.
Here is a basic outline of how to use BlueVine:
Your client remains unaware of BlueVine's involvement throughout the entire factoring process, and you do not ever need to mail or fax in your original invoices.
How much does it cost to use BlueVine? To start, BlueVine charges a $15 wire fee. We've seen other companies charge up to $25 for their services. So, $15 is definitely on the lower side. We can't put an exact number on the total percentage taken from your invoice, but some customers see around a 1 percent discount fee per week on each invoice. The sooner the invoice gets paid, the fewer fees you'll end up paying.
But it's what the company does not charge its customers for that's really impressive. Here are the fees you will not have to pay:
If you already have a QuickBooks account in place, you can connect it to BlueVine in a couple of clicks. Otherwise, you can open a free account in a few minutes by filling out an application. There are some required fields that you should know about:
The application process can take a little longer if you have to go through the "Alternative Verification" method. This will require you to upload a picture of your driver's license and a recent utility bill.
After you've signed up, chances are you'll be pleased by BlueVine's customer service, which is prompt, exhaustive, and ultimately very helpful. You can also reach out for help before you get on board by calling the company's helpline or shooting them an email through a Contact Us popup on bluevine.com/invoice-factoring.
BlueVine features three important seals on its site: McAfee Secure, Inuit Certified ProAdvisor, and BBB Accredited Business. The BBB has given the company an A- rating. According to BBB, BlueVine received one customer complaint in the last three years. The issue was addressed by the company and the complaint was closed. The complaint had been about a billing and collection issue.
At the time of this writing, BlueVine has received 1908 reviews on TrustPilot.com for an average score of 9.6 out of 10. We read through the reviews and noticed a pattern. Here's what people liked the most:
Many of the customer reviews seemed to be from young businesses. At least one admitted that they would have had trouble getting a loan from a bank because their company had been around for less than two years. Still, BlueVine has worked with notable businesses, including Best Buy, Office Depot, Verizon, Walgreens, and more.
For businesses that don't have invoices, BlueVine also offers a business line of credit. Interest starts at 6.9-percent. For more information on how this type of small business loan works, please see our business line of credit page.
In the event that you wish to stop working with BlueVine, you won't have to worry about termination fees. The service is easy to turn off and you won't be punished for leaving (unless you leave behind an unpaid bill, we assume).
In our eyes, this is one of the company's best features. Remember, just because you need this service today, that doesn't mean you'll need it in even a month's time. You don't want to be locked into an accounts receivable funding contract that won't make sense in the future.
Why should you choose BlueVine? There are multiple reasons your business can benefit from BlueVine's services. It offers options for businesses that are just starting out – as young as a year old. In addition, your company is able to acquire cash within 12 to 24 hours. BlueVine offers businesses short-term loans to help companies through challenging times on their feet when they are just starting. If you are looking to acquire some extra cash immediately, BlueVine is a good resource. If you have B2B customers who do not pay their dues on time, invoice factoring may help you get by for a short period of time. Finally, if your business is not able to meet the credit requirements of other lenders, BlueVine is willing to consider borrowers with poor credit scores.
If you are in need of cash fast, you can apply to BlueVine and have access to funds by the same day. The approval process depends on what you are applying for. A line of credit takes about 12 hours to approve. Invoice factoring takes a few minutes to a day to approve, and a term loan can take only 10 minutes of your time.
If your customers are not responsible for their payments, you can use BlueVine's invoice factoring to make up for the late bills until you are back on your feet again. You will receive payment against invoices in about one to 13 weeks. BlueVine will pay 80 to 90 percent of the invoice. They then receive the balance once the customer pays you.
Should your business have a poor credit score, BlueVine will still consider your application. The lender will look at your cash flow and your customers to determine if you qualify for a short-term loan.
For young businesses with invoices, BlueVine is a great fit for fast funding. This is assuming that you've done your homework, though. Be sure to do some research to find the best options out there for you and your business. There may be better loan options that'd cost you less in the long run. But as long as you know that invoice factoring is the solution you're looking for, you will likely have a good experience with BlueVine.