Small and medium sized business (SME) owners are keen to attract independent 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 report, ‘The Future World of Work’, 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.
Sonovate’s research also 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. The report also analysed freelancers’ perspective as follows:
- 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;
- 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.
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.”
To read the report in full visit: https://www.sonovate.com/future-world-of-work/
