According to a new report from timesheet and payroll solutions provider Sonovate, owners at UK small and medium-sized businesses (SMEs) being keen to engage contractors in order to tackle skill gaps, but routine failures to pay freelancers on time are impacting their ability to attract contract workers.
In spite of strong, growing demand for freelancer services in the wake of COVID-19, close to one-third of SMEs (31 per cent) consistently pay contractors late. While 74 per cent of SME owners polled said that they saw the benefits of engaging contractors, just 55 per cent reported paying them on time. 44 per cent of SME owners who use contractors, moreover, said that they typically wait until the last day of contractor payment terms before issuing payment.
The survey showed that 51 per cent of freelancers have had their ability to pay personal bills impacted by late payments. Understandably, this has made many contractors reluctant to work with firms that make late payments, with 48 per cent saying they would refuse to work with companies if they weren’t paid on time.
Furthermore, 36 per cent of workers polled said they would like more flexibility in their work, but are concerned by the uncertainty of contractor pay. 56 per cent said they would only agree to work for a company if they had a strong track record of paying contractors on time. 64 per cent said the government should do more to tackle late payments.
However, the survey also revealed that the widespread problem isn’t necessarily always the fault of SMEs. 50 per cent said that late payments within their own supply chain can take an impact on their ability to pay contractors on time. 38 per cent, meanwhile, said their own cashflow issues mean they cannot continually make prompt contractor payments.
Sonovate co-founder and co-CEO Richard Prime 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.”
