Small business owners crying out for freelance workers post-pandemic - but payment troubles leave them missing out on talent
Small and medium sized business (SME) owners are keen to attract contractor workers to address skills gaps but routinely fail to pay on time, which could lead to them missing out on talent and therefore opportunities.
Based on a survey of over 4,500 people including 500 small and medium-sized business owners, Sonovate’s Future World of Work report reveals that while freelance and contract work is on the rise post-pandemic, a third (31%) of SMEs consistently pay their freelancers and contractors late; half of freelancers surveyed (51%) said these late payments have impacted their ability to pay their own bills on time.
Three-quarters (74%) of small and medium-sized businesses said they recognise the benefits of hiring freelance or contract workers for specialist support over having to invest in a permanent workforce - but only half (55%) reported paying their freelancers on time.
Over two in five (44%) SMEs that use freelance labour admitted they often wait until the last day on which their payment is due before paying contractors. This isn’t necessarily business owners’ fault with half (50%) saying that late payments from clients or customers impact their ability to pay their workforce on time. However, some are just not set up for it. Four in ten (38%) admitted their cashflow can’t handle continual payments to contractors and that their infrastructure does not meet the need for prompt payment services.
Richard Prime, co-founder and co-CEO at Sonovate, said: “Our Future World of Work report shows us that freelance and contract workers have spiked in popularity since the start of the pandemic, with the crisis opening our eyes to new ways of working. Our data suggests that contract workers are the future of the UK’s workforce, enriching the businesses that make use of their specialisms and bringing greater flexibility and work-life balance. Yet small businesses who are unable to accommodate the needs of their workforce and do not consistently pay contractors on time will undoubtedly lose out in the fight for talent. There is a clear need for businesses to adapt the way they approach funding their business to better underpin this future world of work.”
Sonovate’s research shows that over half (55%) of SMEs that use freelance labour have witnessed a sharp increase in the number of people looking for temporary or contract work since the start of the pandemic. When asked, nearly four in ten workers (36%) said they would like to move to a more flexible way of working but are worried about the uncertainty of pay. Over half (56%) said they would only work for a company which had a track record of paying wages on time and more than six in ten (64%) think the Government needs to do more to enforce the prompt payment of invoices. Almost half of freelancers (48%) refuse to continue to work with businesses that are late to pay them.
The report also combines qualitative interviews from 24 business founders, CEOs, investors, policy-makers and thought leaders from the fintech, financial services, tech, consultancy and recruitment sectors.
Writing in the report, Sam O’Connor, CEO of Coconut, a bookkeeping and tax app for sole-traders, says: “Companies must take responsibility for paying freelancers quickly and reliably. I believe there’s a need for businesses to honour invoice terms and even pay invoices in advance, valuing freelancers as the fruitful, powerful resource that they are and respecting that they often do not have time to chase on invoices and lack the extra money to support late payments.”
Julia Kermode, founder of IWORK, an online resource and advocate for the freelance community, adds in the report: “Being paid quickly is a huge issue. And sometimes companies who were traditionally a good payer are now paying more slowly. There is a nervousness in the freelance community with companies under such financial pressure in the last 18 months.”
This was posted in Bdaily's Members' News section by Julia Tsavellas .
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