With more than 50 million content creators worldwide (you can thank TikTok for that), the need for easy and frictionless financial tools that help creators and businesses get paid on time has never been greater. And with many unique players, there’s not a one-size-fits-all payouts solution that makes it easy for stakeholders to work together to make payments fast and easy for everyone involved in the process including
- addressing the pain points around vendor onboarding
- collecting and storing sensitive information
- managing outstanding deliverables and payments
- dealing with tax compliance
- integrating seamlessly with accounting software.
In today’s world of influencer marketing and the creator economy, payments are sent in a variety of ways and by various payment methods. Companies like Meta, TikTok, Snapchat, and Apple Podcasts all offer monetization tools for creators to incentivize them to create content on their platforms (think Instagram Reels and YouTube Shorts).
Brands can also pay content creators to promote their products or services through sponsored posts and/or paid partnerships across various social media platforms like TikTok, Snapchat, and YouTube Shorts.
And there are numerous methods by which funds are ultimately transferred, including PayPal, Bill.com, Venmo, bank transfer, and even creator funds. Payment terms vary from upfront to Net 30, 60, and 90 days after the scope of work is complete.
Let’s face it, payment speed and transparency for businesses and individuals working in the creator economy is a network problem. One mistake or delay in the payments process creates a domino effect across the entire network. This causes real stress on freelancers who rely on on-time payment to pay the bills and impacts the people who “hire” freelancers who have built these relationships based on trust.
To run your business efficiently and effectively, managing (or better yet get rid of) the headaches that could potentially arise is critical so you can focus on actually running your business. We’ll walk you through some of the challenges from the beginning of the payments process to the end that has a trickle-down effect on the rest of your business and other stakeholders, as well as solutions to help manage payouts effectively and efficiently.
Vendor Setup and Management Process
Onboarding a new vendor can be a long process between collecting payment details and W-9 information and managing communications amongst internal and external partners. Not to mention, contact details and payment information are constantly changing. As the number of vendors or freelancers scales so does the complexity of managing this.
Legacy AP software does a decent job of vendor onboarding for suppliers and B2B relationships but results in a lot of extra work when trying to use it for the creator economy. Someone ends up having to work with influencers and handhold them during this process which is not what anyone at a business should have to spend time on.
This should all be handled by an external tool and make it incredibly simple for creators to set up and manage their payment and tax information. Automating your vendor management process flow is key to staying on top of important changes and updates (let your influencers manage it!) when it comes to sending money to payees.
Invoice Processing and Scheduling
Depending on the business/agency, invoice processing can also be an incredibly grueling process. At the end of the day, nobody wants to manage invoices or even have a “better invoice management process”. The cycle of receiving the invoice, approving it, setting a remittance date, paying the invoice, and recording it in your accounting system is antiquated. Without any standardization or automation involved, invoice processing requires a number of hoops and hurdles and back and forth that are not always in the business or client’s control and end up wasting time.
To make it more confusing, there is no standardization in the industry regarding the processes put in place. Some content creators are required by the brand/agency to send the invoice, but sometimes the creator might be asked to just wait, as the brand will pay them per the contractual agreement. In cases where it’s the ladder and the company issues scheduled or push payouts, there’s a lack of visibility on the creator’s end. For creators, transparency is key so they can keep track of what they’ll be paid and when – especially at the end of the year when rounding up tax information.
There is not likely to be a “standard” process anytime soon (or ever), however, there are software solutions that can provide more consistent experiences to all stakeholders regardless of the internal processes businesses have set up to manage freelancer partnerships.
Staying on top of due dates and getting invoices paid on time is necessary to keep fueling a business or agency, but oftentimes net payment terms can affect that. In an ideal world for freelancers and creators, net payment terms wouldn’t exist. However, these terms are necessary because it allows businesses to meet cash flow and working capital needs.
Cash flow is often the most challenging problem a small business owner faces, but net payment terms allow businesses to sell inventory before paying for it. Despite companies working directly with freelancers and contractors, Finance departments usually have strict net 30, 60, or 90-day payment terms and there’s no way to bypass this.
When agencies or talent managers get involved, there’s now a middleman which impacts the timeline a freelancer gets paid because they don’t get paid until the agency/talent manager does. This creates a ripple effect that impacts every player in the creator economy at scale. It has the potential to be detrimental to client relationships.
Busy creative agencies are moving quickly and juggling multiple work streams including tracking campaign-level budgets, managing timelines, ensuring campaign deliverables are met, and producing incredible creative content. On top of managing the day-to-day workload, the Marketing and Accounting teams are also responsible for coordinating campaign deliverables with creators and freelancers.
While these teams can “approve” and “confirm” the completion of the deliverables, the process of making the payment needs to be coordinated with the Finance team, creating additional and unnecessary back and forth. The time it takes to approve payments can easily be eliminated when the right internal teams involved have permission to delegate approvals.
Payments to managers and agents (and payment/ee Splitting)
When it’s time to get paid there are often several stakeholders involved in collecting and receiving payments where payment splitting is required. This typically affects talent managers who receive a certain percentage of the deal/offer if creators are involved – think of it as revenue sharing. This can be a heavy and manual lift for Finance and Accounting teams or the talent manager/agent, depending on how payments flow in real-time. Most often, the burden is felt by talent managers who need to spend time collecting payment and then manually sending it to the freelancer they represent. This results in wasting time when this time could be better spent representing clients and getting more business. Not to mention, payments can get stuck during the transfer of funds. There is a ton of opportunity for automation with payment splitting so talent managers can get rid of this repetitive task.
Ensuring the personal and bank information of the payees are correct and up to date is no easy feat when the process is manual. This often depends on the payment method the creator is using. It requires flawless attention to detail and multiple steps of verification. Additionally, internal teams must manage the verification process when a payment is received to help reduce any friction that comes up. To play it safe, it’s better when all parties can be looped in.
Getting paid is a lot more than moving money from point A to point B. There’s additional paperwork involved that can be a pain after the money is moved. End-of-the-year tax filing – collecting W9s, issuing 1099s, managing name, and address changes – is a major headache for small business and agency owners.
Thankfully, Lumanu’s all-in-one payouts solution takes care of all of this for you and removes any hassles and headaches that interfere with operating and scaling your ecommerce business and getting access to working capital. Lumanu is the only creator-focused startup that lets marketing, accounting, and finance teams more efficiently manage freelancer payments and frees up time to focus on more important initiatives.
With Lumanu you can:
- Send invoices and accept same-day ACH transfers with zero processing fees
- Automatically track incoming and outgoing invoices and payment activities in one simple dashboard
- Avoid messy vendor onboarding and annoying tax obligations at the end of the year
- Save time by automatically splitting payments with talent or freelancers
- Get instant cash on outstanding invoices with EarlyPay and pay on Net terms
- Streamline communications with internal teams including Marketing and Finance teams
If you’re a creative business you need the financial tools and software to help you streamline payouts, gain access to working capital, and collect payments. With Lumanu you and your business can payout creators in one click, hassle-free and get immediate access to working capital with Lumanu’s EarlyPay. Learn more about how Lumanu stacks up to other competitors like PayPal and Bill.com.
456 Growth: A case study on scaling your influencer payments
Take 456 Growth, for example, after switching to Lumanu payouts, their team was able to automate and scale their monthly transactions to creators by 67%. Working with brands and creators in content creation is 456 Growth’s bread and butter.
Now more than ever, creators need their money faster than traditional payment methods and with Lumanu, their team can payout creators, talent managers, agencies, and businesses at scale seamlessly and hassle-free.
If you want to stop worrying about administrative tasks and start winning new business, schedule a demo with us today!