Apr 23, 2024

From Promises to Non Payments: Influencers Turning To Legal Action

Creators trusted this influencer agency. Now they just want their money. A recent outcry on LinkedIn against XXXXXXX, an agency and platform for influencers, underscores the urgency of addressing this issue. Complaints of delayed payments and lack of communication highlight a widespread problem that can tarnish a brand's reputation and alienate invaluable creative talent.

Community Feedback in a recent LinkedIn thread called out the issues faced:

  • Long payment terms, such as "Net 120" days post-due date.

  • Ineffective communication channels, leaving emails unanswered.

  • Necessity for legal action to claim due payments.

The Problem: Delayed Payments and Lack of Transparency

Many influencers are reporting significant delays in payments, extending to several months or even a year+ beyond the agreed terms. Delays happen and are often compounded by a lack of transparency and poor communication from intermediary agencies or platforms. Influencers were told upfront they will be paid X days after deliverables are completed but then the waiting game begins. After completing deliverables, they had no ability to track the status of a payment outside of setting a reminder for themselves on when they SHOULD be paid. This led to a waiting game and then a flood of emails back and forth on when payments were going to be made, from the influencer or manager -> agency contact -> agency finance team. In many cases the creators went directly to the brand who felt terrible and even paid directly.

Late payments not only strain the financial stability of creatives but also damages the trust and reliability perceived in brands associated with these platforms. In many cases the brands who are interacting with the creators had no idea that payments were late until receiving communication pleading for payment.

We asked Jessy Grossman founder of Women in Influencer Marketing her thoughts on the impact to the brands that trust everything is being handled on their behalf - "The biggest risk to a brand who's creators flat out don't get paid via 3rd party is their reputation. No business wants to take on this level of risk, especially when the people affected are content creators with giant megaphones who can turn people against your brand. A couple best practices are to have periodic check-ins with your vendors, ask for reports on progress and payments, and to get feedback directly from the creators. All brands should have oversight over their vendors. There's no excuse not to. It was shocking to me how many brands were surprised that their creators weren't paid. Sure, the vendor is at fault but it's also the brand's responsibility to effectively oversee any company who acts on their behalf."

Rob Ryan AKA Influencer to the Influencers had a similar take - "Creators rely on consistent, on-time payments to keep their business running. When a brand or agency delays a payment or neglects to pay the creator all together, they not only hurt the creator but the brand, agency & client’s reputation in the creator community."

Creators typically reinvest their earnings into future content as well as their livelihood (and potentially the livelihoods of others). Small delays can have a drastic impact.

Even when a company manages payments internally it is often difficult to manage invoices, approvals and payments across Marketing and Finance teams and missing due dates until the next payment run is commonplace. Marketing does not have the ability to easily check on status in a company's accounts payable system, resulting in wasted time trying to track down the status of a payment for a few hundred dollars. If the influencer made a simple error during the vendor signup step then more back and forth and hand holding is needed. This problem is compounded when working across an agency or platform partner and requiring multiple people to check the status of a payment.

This challenge is amplified when a brand gives up control and works with influencers through an agency or influencer platform to help manage their influencer marketing program. There is a clear distinction between campaign execution as a marketing function and vendor management and payment as a finance function, problems occur because of this gap..

The Benefit of Solving Payment Delays and Transparency Issues

Ensuring timely and transparent payments to freelancers is not just an ethical imperative but a strategic advantage. Brands that commit to quick and clear payment processes can expect:

  • Enhanced Brand Reputation and stronger partnerships:

    • Demonstrates reliability and respect for contributors, strengthening brand loyalty among creators and better deliverables which leads to more successful results for the brand.

    • Builds trust and encourages ongoing collaborations with top talent.

  • Operational Efficiency:

    • Better process streamlines financial operations and reduces the administrative burden associated with managing freelance payments.

    • Less time and stress for all parties chasing down status of payments. 

  • Agility:

    • The ability to move quickly to partner with creators when needed to support marketing initiatives.

    • Process built to support scale.

Why Agencies Managing Payments Can Drop the Ball

Some agencies and brands try to manage their influencer partners like traditional vendors in their Finance systems like Quickbooks, Netsuite, BILL, Tipalti. When agencies are working with lots of clients and combine funds into a single holding account it becomes REALLY difficult to reconcile and track everything. The typical steps involved are:

  1. VENDOR ONBOARDING - The problem with this approach starts with vendor onboarding. The process was built for companies, not individuals who often need help completing the setup process or enter incorrect information on their W9.

  2. INVOICE APPROVALS - When invoices are submitted they first have to be verified and are sometimes incomplete e.g. missing a PO or contain incorrect or incomplete information. For example the due date is not what was agreed upon in the contract. These can simply fall through the cracks. Even correct invoices can get lost in email inboxes.

  3. PAYMENTS CONTROLLED BY FINANCE - The biggest problem with delayed and missed payments stems from the fact that once invoices are submitted and approved neither the influencer or their main contact at the brand (marketer) or agency (campaign manager) has visibility into the payment status. The payment is controlled by Finance and sits in the accounts payment system. Given there are typically dozens or even hundreds of influencer payments to go out this lack of transparency and gap in communication often results in delays and forgotten payments.

  4. VISIBILITY AND RECONCILIATION - After payments go out, marketing recipes on their tools for tracking and reconciliation which are different from the finance systems that control the payments. These systems are not in sync meaning the marketing or account team may think payments went out when they did not.

How Lumanu Helps Solve Payment Issues

Lumanu is dedicated to enhancing the payment experience for freelancers and brands alike, offering a robust solution tailored to meet the demands of today’s digital marketplace. Lumanu acts a Fintech Master Vendor (FMV) for brands so they can work through one vendor to manage payouts to their influencer partners.

Lumanu handles:

  • Vendor Onboarding and Compliance:

    • Lumanu simplifies the onboarding process for influencers, ensuring all compliance requirements are met without burdening the brand or the creator.

  • Transparency and Control:

    • With Lumanu, all parties at the brand and their agency partner have direct visibility into the payment process. This control helps to avoid misunderstandings and ensures that payments are processed as agreed.

  • Single Vendor Efficiency:

    • Acting as a single vendor for influencer payments, Lumanu handles all administrative and compliance aspects, allowing brands to focus on their core activities without being bogged down by payment issues.

  • Quick and Reliable Payment Processing:

    • Lumanu ensures that payments are processed swiftly and reliably, so influencers are paid on time, every time, enhancing satisfaction and trust.

In an industry where reputation and trust are paramount, ensuring the timely and transparent payment of influencers is not optional but essential. Lumanu stands at the forefront of this initiative, providing a solution that not only addresses the immediate payment concerns but also builds a foundation for long-term collaborative success. Brands looking to lead in the competitive field of influencer marketing must prioritize the financial well-being of their creator partners, and Lumanu is here to make that a reality.



Apr 23, 2024

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.