At the opening session of the Recruitment Agency Expo, Ann Swain, CEO, APSCo, claimed that flexibility is no longer the key focus for employees and instead, it is now balance.
If this is correct, and employees want more balance in their work life, it may help to explain why the quarterly decrease in employment, was mainly driven by full-time self-employed workers. According to the Office of National Statistics, there are currently 4.24 million people in the UK who are self-employed – a number that is gradually increasing.
People opt for self-employment for a wide variety of reasons, whether it’s to better accommodate childcare, to pursue a passion or indeed, to achieve more balance in their life.
Adapting to the market
Whatever the reason, the most competitive companies know that they must be flexible in adapting to the market and social change. With a shift to self-employed workers, contractors will become increasingly crucial to the success of businesses across the UK. But if businesses, are not set up appropriately to handle the different needs of contract workers, then they risk missing out.
One area of real contention, experienced by SMEs in particular, is late payments, with company cashflow issues playing havoc on working relationships.
As it stands, two in five (43%) companies struggle to pay their contract workers on time as a result of cashflow problems, while 38% take over 90 days to pay contractors. And the problem is clearly getting worse – 45% say it’s taking them longer to pay contractors than it was 12 months ago.
This is unacceptable, especially amidst concerted efforts by the authorities to reduce payment times. For example, the European Parliament has put in place a resolution aimed at combatting late payments, whilst the UK Late Payment Law clearly states that payment must be received in the first 30 days of sending the invoice or delivery of goods or services, whichever one is later.
Longer payment times also have a significant impact on contractor retention, with nearly four in ten (37%) businesses admitting they have lost contract workers as a result of not being able to pay them promptly. Meanwhile, half (51%) of those who use, or have used, contractors agree that payroll issues could lead to their organisation missing out on the quality talent it needs to fuel long-term success.
It’s often a vicious circle. Nearly two-thirds (63%) say late payments from clients and customers has a substantial knock-on effect on their ability to pay contract workers on time.
Providing better access to finance
The answer surely lies in better access to finance, but traditional forms of funding are proving woefully inadequate. To illustrate the point, our research found the percentage of organisations experiencing difficulties accessing finance increased from 26% last year to 43% this year, with 54% now saying that banks’ lending policies have not kept pace with modern business needs.
The good news is that fintech payment solutions are primed and ready to fill this gap. There is now a real opportunity for recruiters to work with fintech providers, so they can step in with a financing facility that alleviates the pressure of these late payments on both their workers and their clients. Invoice financing means contractors can be paid within seven days, irrespective of whether the business they work for is experiencing payment issues.
All parties gain. The contractor is paid promptly. The recruiter builds a reputation as an efficient operator, retaining the custom of contractors. And businesses can be offered more flexible payment terms, creating a more harmonious relationship with the recruitment or labour agency. We’re helping everyone to bypass the cashflow crunch.
With the right approach, it’s possible that payment can be made on time, every time. Unfortunately, many organisations are held back by working with banks and other financial institutions that lack either the vision or the technology to match their changing needs. By embracing the latest fintech developments, you can help to buck the trend.