As businesses struggle with issues relating to cashflow and payroll, new research has found that freelancers are waiting three times longer than full time staff to get paid, in spite of the fact that UK businesses are increasingly reliant on contractors.
The research, from payment solutions firm Sonovate, polled 500 senior business decision makers. It revealed that contractors are (or have been) used by 53 per cent of all small and medium-sized businesses (SMEs), a figure that rises to 81 per cent when applied solely to medium-sized businesses.
However, 27 per cent of all SMEs admitted to taking more than 90 days to pay freelance staff, three times longer than it takes on average to pay permanent staff. Despite medium-sized firms generally being expected to have more efficient, predictable cashflow than small companies, 37 per cent of medium-sized firms said they took an average of more than 90 days to pay contract workers.
28 per cent of SMEs polled cited cashflow as one of the main factors behind slow payments (33 per cent of medium-sized businesses) and 62 per cent said that their cashflow issues stemmed from late payments by their own suppliers and customers. 28 per cent cited issues with their payroll systems.
39 per cent conceded that failure to pay contractors on time could result in them missing out on the best talent, while 24 per cent said they had already lost contractors due to not being able to pay them promptly.
Sonovate CEO and co-founder Richard Prime said: “Despite the last few years accelerating the number of workers going freelance or contracting, they are consistently being paid late which is not sustainable for many people – particularly at the moment.”
“We know that contract workers are the future of the UK’s workforce, but with the cost-of-living crisis front of mind, 90 days is just absurdly long to wait for payment. Against the backdrop of this crisis, it is paramount that businesses have access to solutions that support them to offer fairer and swifter payment across the workforce supply chain.”
