Brand Deal Payment Tips: Late Payments, Vendor Forms, & Tax Paperwork!
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Today we're gonna be talking about what to do when your brand deal payments are delayed and how to navigate all of the vendor paperwork and payment terms you need to know to finally get that money in your bank account.
So to start off, let's talk about one of the most commonly asked questions when it comes to working with brands, and that's payment terms. So let's say that you get a brand deal and they've send over a contract to you, and it says net 60. So first of all, net 60 basically means that they have 60 days to pay you once you complete the partnership.
But what is industry standard these days? Like so many other things in the influencer marketing industry, there's really no standard. Which basically aids in why this can be so frustrating, but I can tell you from most of the creators that I have spoken to, what seems to be the norm is net 30. However, every creator does at some point have some sort of a horror story, right?
Okay, a time I had to wait 60 days, 90 days, some of them even a year, some of them they are still chasing payment, which when I've been told this, made my jaw hit the floor. So, I think this just kind of aids an element that there is no standard. Probably you can count on net 30, but you'd really need to be able to have that conversation with the brand to manage your own expectations upfront.
Are payment terms typically calendar days or business days?
So when you are working with net terms, luckily that does mean calendar days. So if they say net 30, that doesn't include the weekends. It does actually kind of shorten it a little bit. And that is the standard across all the industries. So that's pretty on par.
What about other payment term tips like splitting 50% of the full compensation upfront at the net payment terms, let's say net 30 and then
the balance upon completion? My best advice would be to really think about the payment conversation and make it something that's mandatory to bring up early on. The reason for that, is this gives you an opportunity to actually negotiate, and leverage for better terms, especially when you understand what the brand's payment processes are going to be.
So things you should be asking is what is their method going to be to pay you out? Is it PayPal? Because if it is PayPal there are fees that are involved in that. It's 2.9% plus 30 cents. And that's something that PayPal considers a seller fee. So in this instance, as a creator you are offering your services and your content as a seller. So per their acceptable use policy, you have to pay those fees. The brand can offer to pay them for you. So that's something that you can talk about upfront and negotiate and say, "Hey, like with these fees "who's going to be covering those." It's better to bring it up early, right? Because if you wait and you do your end of the bargain, you complete the content, you give it. They're like, "This looks great. "Thank you. "Hey, what's your PayPal address?" Then you kind of miss your window of opportunity to negotiate it because you already have a contract and everything. So I would say really just have that conversation early. The other thing I would love to mention is that there is an option called friends and family, for PayPal that is free. So a lot of brands might ask to pay you that way or you might even think that that's a good way to do it. I would advise against that, because it's not... that's not PayPal, it's acceptable use policy and you can actually get your account locked or frozen or under investigation. And I've also heard some horror stories about that where essentially your account could be locked for months and then you can't get your money (laughing) So yeah, it's best to avoid that. The liability is on you as a seller to make sure that you are doing it compliantly.
So another major headache for influencers is that a lot of brands and agencies require you to fill out what's called vendor paperwork. And it can sometimes be pretty long and detailed and every place seems to do it differently. So here's an example from Interpublic Group. So this is the vendor information form from the Interpublic Group, which is a really, really large advertising agency holding group. And this is pretty typical to what you'll see. So let's just go through this form. So essentially you see all sorts of information about who you are, your company name.
If you are just a sole proprietor, you can just put your name there and your contact name. If you don't have like a S-corp or an LLC that type of thing, your address, your title. A lot of creators ask what their title is. You can just put creator there or you can say founder or president or something like that. For your city, state and zip, your telephone N/A, not available If you don't have a fax number. URL if you don't have a website or a blog, you can just put your YouTube channel or your Instagram link there, your email address obviously. Product and service offered, probably social media advertising or advertising services or something like that is probably sufficient. And the year your business was established if you don't have... You weren't incorporated, you can just say that maybe your YouTube channel started or your Instagram page started. Your tax ID number there. Again, if you are a corporation or S-corp, LLC you'll put your federal tax ID number there, otherwise you'll put your Social Security number there. So the NAICS code, this one confuses a ton of creators It's the North American Industry Classification System code. This is like if this agency was hiring like some traditional vendor, like let's say janitorial services or something or food catering or something like that they would actually use this code here. So the code that we typically use is five, four, one, eight, one, zero. I'll say that again, five, four, one, eight, one, zero. And that's for advertising agencies. And that's typically sufficient for what the brands or the agencies are looking for.
And then moving down here, you have all of these boxes, right? And so if you are a veteran owned business, if you're a disabled owned business, minority owned business, obviously check some of those boxes here. But if you're none of those things, you can just click small business concern. I know that's confusing. People don't understand what small business concern means. And again, there are typically definitions on later pages of these vendor forms, but small business concern is really the one that you want to check in.If your company is not certified for any of those things, just say no. If your company's not certified, you just click no.
And then again, ownership information you'll have to fill out my wife and I own our S-corporation. We have an S-corporation for our social media,
campaigns that we run. And so it's 50 50. So essentially. And so we fill out 50% of one box and 50% of the other. And then again, registration
and certification. If you don't have anything there, you just leave this blank, and then you... And again if you don't have any of these, you just leave it blank or you say no. And then you type your name and you sign it you put your title there. Again, it could just be creator. It could be president. It could be founder. If you don't have a formal corporation you could just say creator, and then the date. So you don't need to overthink these forms, but this is the type of typical information you'll see on these vendor information forms. Back to you Lauren. So what are your tips for creators to keep up with all of this paperwork, especially because, if you make an error on it or you don't confirm that the brand
or the agency received it and then it's filled out properly, that can cause payment.
Make sure that you are filling out these forms with accuracy is super important, because it can really add a lot of days onto the process. A lot of times, especially the bigger companies who have these vendor processes, there's different departments that are in communication about this. So if you go through the process, it's wrong, it goes through, your contract then to the accounting department they need to check it and proof it, send it back. Like there's just this whole chain of communication and events that can really slow down the process. If you aren't sure, ask clarifying question, because the amount of time you're gonna wait to get the answer, to get the clarity you need is a lot shorter than if you do it wrong and have to start over. I would recommend like having maybe like a vendor onboarding little cheat sheet for yourself. Have that information that's usually asked, even if there's something that's been confusing to you maybe some words or something like write out what the clarity you've gotten from other people are so that you can rely on this and have it all in one place.
Moving on to tax information.
So I know that some creators and influencers hesitate when brands or agencies ask them to submit their W-9 Form, if you're in the United States. And they ask, well is it really necessary? So technically, unless the brand or agency is going to be paying you more than $600 in that calendar year, you technically don't need to submit a W-9 Form, but it is standard practice. So let's just go through the form and explain it 'cause it's really simple. So there's a bunch of pages on the W-9 Form. And honestly, the first page is really the only one you need to worry about. So let's go through each field. So field number one is your name. So if you're a sole proprietor, you don't have an LLC, you don't have let's say an S-corp or something. And when you get income from brand deals, you just add it to the top of your, let's say, if you have a nine to five, you just add it to the top of that income. You're just gonna write your legal name right on that line number one.
So line number two is if you have a DBA, like a doing business as or disregarded entity name that is different from your legal name. So, and you can have one of those even if you're a sole proprietor you don't necessarily need to have like an LLC or an S-corp to have a DBA. So that's what you would put on the second line. But honestly, the vast majority of influencers you're probably just using your legal name. You're a sole prop. So just write your full name on line one. Don't write anything on line two, cause the IRS can get confused if you try and add something on line two. If you are an S-corp or an LLC,you would actually, instead of your legal name on line one, you would write the name of your LLC, or you name your Corp online one, not your legal name.
Line three, this is where you actually check the box of what your federal tax classification is. So, you would essentially, if you have an LLC you'd check that, if you have an S-corp you'd check that, otherwise you... Or if you were a sole prop, you would also check the first box. So again, all these other lines, other... You don't need to write anything, payee code. You don't need to do any of that stuff there. You do need to fill out your address there. So your address your city, state and Zip. You don't need to write account numbers here, unless the brand of the agency requests that of you. And then here's the most critical part on part one, which is the Social Security number or the Employer Identification Number. I would say, this is the thing that most creators get confused about. And so again, if you are a sole proprietor, you just include your social security number there. If you have an S corp or an LLC, then you only include your Employer Identification Number. And this is something... So, again, to be completely clear, unless you have been given an Employer Identification Number by the federal government in the United States, you don't write anything there, you only write your Social Security number in there.
The reason it can get confusing is that, it's the same number of boxes, right? So there's nine boxes on both of these things, right? So again, just make sure to fill out only one of those things. And then, you just come down here and you sign it, you sign your signature, you date it and then that's all that you submit to the brand or the agency. And again, they need this form to be able to generate what's called a 1099 Form, that they will send to you at tax time. And then you will essentially, when you're doing your taxes, you will declare that you received money from this particular brand. So I know the absolute bane of many creators existence is chasing down brands who owe them money. So let's bring in Lauren one more time to talk about ways to ensure that you can get paid on time.
Why do brands wait until the very last minute to pay?
So another thing that I've heard before that has been a little bit surprising to me is that sometimes it's actually the more established well-known brands and agencies then could take a long time to pay. And the reason for that is they're bigger, right? They have bigger departments and more strict processes that they need to make sure that they're being compliant with.
You know, one thing that we do, which we've found to be pretty effective is about one to 1 1/2 weeks before the payment is due, we will follow up with the brand or the agency and essentially say, okay, is it on track to be paid on time? And that way that gives them an opportunity to be like, oh no, we don't have this form filled out or whatever or we need your tax information.
I actually have asked creators about this in the past and it was funny because of what they would say, I would say, how often are you not paid on time? And the response that I would get was either, "Oh, all the time." Or some creators would say, even more interestingly, "I used to not be paid on time." And I'd say, "Okay, what changed? "You know, what's the secret?" And they're like, you know, what I had to do was I just had to get a little more aggressive I had to follow up and send over and over, like are we on track for payment?
Hey, this is the invoice.
Hey, are we on track for payment?
And a lot of the creators express that that was very awkward for them, that they don't want their relationship to be about, hey, where's my money. But, interestingly enough, I also did research on the flip side with brands. And what they told me is that they need those reminders, that helps them. So, I think creators kind of sometimes think that, that's awkward and that it's hindering the relationship in a way, but in reality a lot of brands find it as a friendly reminder to helps them stay on task.
What About A Late Payment Penalty?
I've seen some influencers try to add a late payment penalty onto their invoice like in the terms and condition it says it, if it's not paid on time, it's like 1% of the total fee for each day or whatever. Is that effective? It's becoming very common more so when you have representation, agents and agencies, that's pretty common place that they always make sure that's in their contracts. As a creator it's definitely a tool that you have in your tool belt. I would say it's pretty important to make sure if you are gonna do that, that you communicate it, during the negotiation process and make it very well-known, you know, here's my late fee. Here's what qualifies that you're gonna be actually penalized. Here's what needs to happen, how long it takes to actually charge that. It's an option if you feel comfortable doing that. And do you think that that gives you some ammo to the situation, go for it.
What to Do If A Brand Becomes Unresponsive
So here's the thing that every creator and influencer wants to know if they've been in this situation, which is, what are the tactics that you can use, if a brand becomes totally unresponsive and seems like they're trying to ghost you. So, essentially what you should do is, reply with a very firmly worded email that you expect payment by X date, okay? And then another follow up email, let's say, 7 to 10 days after that one, saying that if you don't hear back by this new date, you're gonna be retaining legal counsel. And honestly, sometimes that's enough to get them to act. And if they still don't respond you're at a crossroads here, right? Okay, so first of all, how big is the deal size, right? Like, is it going to be worth it to hire a lawyer and try to take that brand or that agency to court? Do you really think it's realistic that you will get that money back? I mean, again, if the deal is large enough, it might be worth it, but if it's not, do you wanna really go through all that anguish, all that time, all of that mental energy going through that process? Sometimes you may need to cut your losses. So you're probably wondering, how often does this kind of thing happen. So, I'm gonna tell a quick little story, which is that I have done literally hundreds and hundreds and hundreds of brand deals, both my wife and I personally, as well as through my influencer agency training family. And this is only ever happened once, okay?
The Story About How I Lost $5000 On A Brand Deal
So, there was a brand deal and it was... I think it was for three Instagram posts and there was also like three additional photo assets that I had to create for the brand and then they were going to repost it on their Instagram handle. And I did all the posts, the brand was like fairly responsive,
the agency was fairly responsive. And then it was... So it was a $5,000 deal, I'll just tell you it was a couple of years ago. And so when it came time for payment, I submitted the vendor paperwork. I submitted my invoice and then nothing, I didn't hear anything for a month and then the invoice became 30 days overdue. They basically finally responded and says, we're so sorry. It's processing 60 days overdue. They started becoming non-responsive to my messages. 90 days overdue, at that point, when it's like 90 days overdue, you kind of have to start to be suspicious as a creator. Am I really gonna get paid for this deal? But in all honestly, I was earnest, right? I kept thinking, okay, I can make this happen. And the craziest part about this whole thing, is I started getting connected to other influencers that are part of the same campaign that I had seen posting who had said that they also been paid. So it was just totally nuts and ultimately what happened is, I think maybe like five, six months down the line, I got an email saying that, that company was going bankrupt and they were like liquidating all the assets and stuff. So clearly it wasn't gonna get paid for that one. So again, this is after hundreds and hundreds and hundreds of deals, it's only happened to me once. You can read the full story HERE.
So if you have your ducks in a row, if you're working with legitimate brands, legitimate agencies, you have the contract in place. This really should not be something that, you have a bunch of anxiety about.
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