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Companies should pay faster to keep freelance artists afloat

The past year was marked by rising inflation, labor shortages, supply chain bottlenecks, and a volatile housing market—trends that have incapacitated workers and businesses, forcing many employees to find new jobs and businesses to close their doors.

During this time of economic instability, businesses have shared one thing in common: the need to chase late payments. Strikingly, studies show that 25% of small businesses have had to wait between 20-30 days past the payment due date to receive funds. And, what’s more, 55% believe those delayed payments are “deliberate.”

Freelancers carry much of the load

While late payments affect companies both big and small, their impact on freelancers and contractors is particularly burdensome. When a company faces a late payment, it often has some cushion to protect the business from going under. But, when a self-employed individual is paid late, they might be unable to cover their bills. This is even more overbearing for self-employed people of color who already face prevalent socioeconomic disadvantages. 

Late payments cannot continue to be the status quo. Instead, companies have a responsibility to continuously reevaluate their payment practices and determine new ways to treat their contractors fairly. They must prioritize ensuring that funds are available within a reasonable time frame before hiring contractors.

Artists have bills too

In my home state of California, freelancers and contractors are the norm. Particularly in the arts and entertainment industry, many artists are not employed by one company. Rather, they are self-employed, dependent on finding the next gig to pay their rent and stay afloat. 

To make matters worse, work opportunities are disappearing. During the pandemic, the Golden State saw the loss of over 175,000 jobs in the creative sector, leaving entrepreneurs with fewer opportunities to support themselves. And, nationally, the creative industry lost an estimated 2.7 million jobs and more than $150 billion in sales.

More than ever, companies that hire artists, actors, and models on a freelance basis need to be part of the change and help make freelancing a sustainable career. 

Companies need to act responsibly to support artists

Historically, freelancers have needed to wait months to receive a paycheck after completing a job or project due to the traditional payment structures in place at many corporations. During the pandemic, this reality was only exacerbated, leaving many freelancers financially insecure and wondering whether they would need to pivot to a different career path. It also heightened entrance barriers for others who cannot afford to wait that long to get paid.

At my company, Radical Womxn, we aim to uplift systematically excluded minority creators by prioritizing equitable production practices and providing access to resources needed to succeed in the media and creative economy. We recognized the hardships faced by freelancers and contractors. When trying to address this issue, we sought alternative ways of paying our contractors—and that started with embracing the digitization of the payments ecosystem.  

Digitizing payments is better for everyone

Through fast and efficient invoicing and payment processes, business-to-business (B2B) payment solutions like Melio provide the opportunity to easily pay freelancers in one or two days instead of the industry average of one or two months. Since using the platform, it has allowed us to open more doors and opportunities for creators – especially those from disadvantaged communities—to tell their stories and get their foot in the door of the industry.

With some extra research, companies may find that there is a multitude of tools available to help uplift and support creators. Even if a company is not ready to embrace new technology and move away from traditional payment methods like checks, it can at least be transparent with contractors about the time it may take to be paid for their labor.

While many companies, including my own, suffered major financial setbacks as a result of the pandemic, that should never get in the way of continued efforts to treat freelancers fairly. Together, we can make the creative sector in California—and across the country—more equitable and sustainable. 

Lauren Kruz is a Melio customer and the co-founder and director of Radical Womxn, a California-based creative studio. 

This article originally appeared in Campaign.

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