As a semblance of ‘normality’ returns to working lives, both workers and business owners are navigating a reimagined, post-pandemic reality – where the appetite for flexible, hybrid and tech-driven work is more apparent than ever.
The PeoplePerHour platform recently announced over 1.5m new freelancer registrations since the start of the pandemic – a staggering 63% increase compared to the year before.
While businesses have a healthy appetite for freelance and contract workers, the reality is that many are not equipped for such a shift in their workforce, hampered by their antiquated financial infrastructure and legacy systems.
The latest Sonovate Future World of Work report found that well over a third of small business owners admit their cash flow is not set up to accommodate the continual payment of contingent workers – individuals who provide independent services to an organisation – with 44% attempting to change their funding and accounting structures to cater to this growing demographic.
Concerns surrounding payment mean that 34% of business owners are holding off hiring freelancers. This means they are losing out on the associated benefits, from the provision of specialist support to being able to turn support on and off as required, without having to invest in a permanent headcount.
Worryingly, a similar proportion, at 31%, routinely fail to pay all their contract and freelance workers on time every month – this can cause huge financial pressures for freelancers, especially as the costly Christmas period approaches and household costs continue to soar.
As it stands, businesses across the UK are not financially and operationally equipped to succeed in the future world of work. As contingent working continues to boom, so too does the number of businesses that require made-to-measure funding, that’s embedded at the point of need and always-on.
At Sonovate, we have identified three fintech trends that businesses need to embrace to unlock working capital, streamline processes, improve efficiency and ensure their workers get paid on time, in turn capitalising on the benefits freelancers have to offer.
Businesses with contingent workforces are crying out for on-demand finance. In the same way that workers can click a button and start working, they expect to click a button and get paid. However, this doesn’t work when the businesses that hire them suffer from late or non-payment of invoices themselves.
Ready access to a fluid stream of capital has become more crucial than ever – this is where lending-as-a-service comes in, a model in which banks can provide non-financial companies with an embedded integration of lending services.
Part of Sonovate’s aim is to design the infrastructure which secures that access and will better underpin the future world of work, challenging traditional lenders that simply haven’t been able or sufficiently incentivised to develop the technology that businesses are pressing for.
Embedded at the point of need
Embedded finance enables non-financial service companies to seamlessly integrate financial services into their business model through APIs. An embedded finance platform, like the one offered by Sonovate, allows businesses to oversee invoices, timesheets, and contracts from a single centralised system.
In the consumer space, and spurred on by the pandemic, people have embraced ecommerce and digital services, and their expectations for seamless customer experience – with frictionless checkout and payment – have increased accordingly.
While embedded finance – such as ‘buy now, pay later’ – is fast becoming the standard in the consumer-facing world, it still has some way to go when it comes to businesses. Just as individuals now expect this frictionless experience when using their favourite apps, businesses want access to finance to scale and pay their workers easily, and contractors and freelancers expect to get paid on time.
Embedded finance – be it B2B or B2C – helps businesses optimise their user experience and generate higher revenue streams.
The Open Data movement
Open Banking, which puts people in control of the information they generate and share, has huge implications for freelancers and contingent workers. A host of tools rely on the technology to help sole traders and freelancers to manage their cashflow with confidence.
In a financial ecosystem characterised by Open Banking and a proliferation of data-driven fintech solutions, embedded finance providers and other fintech innovators are responding by reimagining how finance works for businesses and customising the options they need.
Don’t lose out
Flexible working is here to stay, and since the market is talent-driven, companies that are inflexible will lose out in the fight for talent, particularly among the younger generations.
In fact, more than half of 18 to 34-year-olds warn that talented young people won’t be willing to join organisations that are inflexible about the way their people choose to work.
Businesses must embrace new financial technologies to better cater to flexible forms of working, leveraging the innovations fintechs have to offer and making use of technology-led, not service-driven, access to finance that ensures maximal cashflow.
With global collaboration, innovative tech, and efficient, scalable finance, together businesses and fintechs can build a more flexible, sustainable, and empowering future world of work.
Richard Prime (pictured) is co-CEO and founder of Sonovate