DealMaker's new payouts system ensures disbursements at a steady pace and on-demand reporting.
Note: this is applicable to the v2 of our Automatic Payouts system. If you are not sure whether your deal is on v2 or eligible for v2, please reach out to your customer success representative.
DealMaker’s automated payouts recently saw an update in the logic used to disburse investor proceeds from a capital raise. This update will ensure that the system continues to run at a regular and predictable cadence, and allows the user to pull automated high-level reconciliation reports without the need for manual intervention.
The new system allows funds to be disbursed without waiting for the payment processor’s additional two-day settling time, provided there are enough additional funds in the account (typically from investors who have funded but have not yet been accepted).
The system breaks funds up into several fundamental “buckets”. These are as follows:
Cleared
This is the gross amount of money paid by investors whose transactions have been successfully completed, and who’s investments have been accepted (countersigned). This is the sum of all such transactions processed in the settlement account, including all funds which have been previously disbursed, applied against open invoices, and what is remaining in the settlement account. When an investor is refunded or if investors dispute their payment, those funds are no longer included in the calculation of “Cleared” payments.
Processing Fees
This is money collected by DealMaker as a processing fee. This is subtracted from the “Cleared” bucket.
Net Proceeds
This is the gross investor proceeds less processing fees.
Paid Out
This is the sum of all historic disbursements.
Invoice Deductions
This is net proceeds applied against any of DealMaker’s open invoices for this issuer. This may also be referred to as “Account Debits”.
Past Due Invoices
This is the sum of invoices which are owed by the Issuer to DealMaker. This amount will be “held back” from net proceeds until the invoice amounts are either collected from the Issuer’s settlement account or paid through the normal course of business.
Upcoming Ad Spend.
This is the sum of funds which have been earmarked for spending on future ad placements. This is only applicable if the Issuer is planning to use funds from their settlement account to cover their ad spend. This amount will also be “held back” from net proceeds until the ads have either been paid for with funds from the Issuer’s settlement account or paid through the normal course of business.
Holdback
5% of the net proceeds are held back from payouts for 90 days from the date the transaction has been cleared. This is to leave a buffer to account for potential refunds or disputes of already accepted investors.
Available to payout:
This is the amount available to be disbursed to the issuer. If this is a positive balance, this will payout to the Issuer’s bank account at the next cycle - typically every night at midnight (payouts initiated on the weekend will be processed on the next business day). If this amount is negative, due to past due invoices, upcoming ad spend, or refunds/disputes, then nothing will be paid out, until enough money is pooled from incoming investments to turn the balance positive. The “available to payout” amount may also be limited by the amount of money available in the settlement account. DealMaker business logic counts funds as ready to payout as soon as the transaction is approved and the investor is accepted, but our payment processor also applies a two-day hold period to funds. This is compensated for with funds which have been fully “cleared” but belong to investors who haven’t been accepted yet, but sometimes there are not enough such funds. In this case, the largest possible amount of funds is paid out, and the remainder becomes “payout ready” as it clears the two-day hold period.
The calculation for “payout ready” is as follows:
Available in DealMaker = Cleared - Application fees - Paid Out - Invoice Deductions - Ad Spend - Holdback Payout Ready = Min[payoutable, available in processing account]
Reporting:
A comprehensive report summarizing the above information can be accessed from DealMaker. On the "investors" page of a deal, click on "export data" and select "Transaction Export [BETA]"