Fixing Royalty Payment Distribution in the Music Industry: Part 2
Many royalty organizations have not yet discovered the power and functional simplicity of digital distribution payment systems. Instead, many organizations have simply settled for familiar modes of funds distribution, opting to handle payments using traditional methods like checks or wire transfers.
As mentioned in part 1 of the royalties series, there are many reasons to upgrade the way you distribute royalties, today I’m going to tell you about 3 more benefits that will have a positive impact on your overall business operations.
Provide More Control and Greater Visibility
Many royalty payments are still made by check, ACH, or wire transfers. If you’ve read the Hyperwallet blog in the past, you’ll know there are a handful of limitations when it comes to these payment methods. In today’s on-demand technology landscape, there’s an increasing demand for on-the-go access to financial services. Global artists and contributors want more choice in their payment delivery methods and access to multi-currency payout options. Moreover, the logistics of distribution means that many organizations redirect international royalty payments through several regional offices or financial institutions before the funds reach their final destination and recipient. Payees have no insight into the delivery delays, the fees involved, or when the royalty payment will actually arrive.
Enterprise payout platforms, like that of Hyperwallet, are designed to address both the demand for payout optionality and common payout logistics issues. With Hyperwallet, organizations can give their royalty recipients the option to accept their payments in a range of convenient payout methods – PayPal, Venmo, direct to debit, prepaid cards, local bank deposit, and more – just about anywhere in the world. Better yet, Hyperwallet offers more than 50 payout currencies, helping to ensure royalty artists can use their earnings right away, no matter where they’re located.
With modern payout platforms, organizations can provide recipients with far more visibility into the royalty process. Statements can be itemized to show funds received for individual sales and services, allowing artists and songwriters to better forecast their recurring earnings. Recipients can also better pinpoint the timing of their payment deliveries, and even log purchases made with their royalty earnings for their own records.
Simplify Your Organization’s Year End Tax Reporting Process
Songwriters and performing artists are concerned with the business of their art. Since the royalty payments they receive for the use of their art is considered income, they must claim these payments as such when filing their taxes. According to tax law, organizations located in the United States must provide their royalty recipients with a 1099 form at the end of the year if said recipient receives payments of over $600 US annually. However, before the 1099 form is sent, royalty organizations must request their recipients to fill out a W-9 form in order to collect and validate their personal information. In general, organizations go through a lot of manual effort and work to obtain these completed W-9 forms. This involves keeping track of all the attempts they make to secure this information from a recipient in order to protect themselves from IRS penalties and fines.
With Hyperwallet, you can reduce the complexity of royalty accounting at your organization, as well as streamline the collection of tax data for your recipients. Hyperwallet’s system collects your recipients’ personal information (i.e. name, address, taxpayer ID, or Social Security Number) before royalties can be collected, in order to produce a W-9 form for US citizens or a W-8BEN for recipients of foreign status. Hyperwallet also files the 1099 form directly with the IRS and makes it easy for recipients to access their tax forms digitally, saving tremendous administrative accounting time.
Pay Artists Fast, Wherever They Are
Paying artists in a currency that isn’t local to their geography can cause some major issues, not to mention cost your recipients a ton in foreign exchange fees. The higher the payout, the bigger these fees become. Moreover, sending a paper check in US dollars overseas could be a real challenge for the artist who might not have a US dollar bank account into which deposit the money. Today, artists should be able to accept cross-border, multi-currency royalty payments just as quickly and cost-effectively as they can with domestic payments.
With Hyperwallet, you can give recipients the freedom to receive their funds in the local currency of their choice. Artists are not only able to get their money quickly and securely, but also have more control and visibility when it comes to any foreign exchange fees or transfer costs. Royalty organizations can now reach recipients almost anywhere in the world without routing through a centralized location or regional banks, thereby helping to reduce internal processing times, lifting fees, and shipping costs, as well as enabling faster payment.
Ready to deliver an upgraded royalty experience? Contact Hyperwallet’s music royalty payout experts and learn how we can enable fast, seamless distribution of royalties for your organization. Looking for more information on Hyperwallet’s royalty distribution technology? Then check out Hyperwallet’s guide on Improving the Royalty Payout Process for Recipients.