UK businesses struggling to pay contractors

Friday 13 October 2017

One of the most frustrating things for any freelancer is not getting paid on time. Whether you're going solo as a sole trader or have set up your own limited company, you will always need to know where the money is coming from and when it's going to arrive. Unfortunately, a recent study has found that UK businesses are having trouble paying their self-employed contractors.

ROC Consulting surveyed 250 IT and finance decision makers woking at companies that employed over 2,000 people, to find out how the UK was coping with paying gig workers. They found that surprisingly few organisations were set up for this, despite 74 per cent of respondents saying the changing state of UK employment require different ways of paying workers.

Only 56 per cent of decision makers from the private sector believed their payroll system could meet the challenge of dealing with short-term contractors. The situation is even worse in the public sector, with just 39 per cent of decision makers saying their systems were up to the task.

One of the problems commonly encountered by freelancers is late payment, and the survey gives some insight into how this ends up happening. Almost 60 per cent of the finance and IT decision makers polled said they could not pay anyone new on their system until a new payroll cycle had started.

This can be an issue, as the study uncovered that 78 per cent of organisations pay monthly, meaning it could easily be six weeks until a contractor receives their payment. Despite this, 60 per cent of those surveyed said they would not consider moving to a daily model of payment.

Jerry Chilvers, ROC Consulting's CEO, said: "In order to thrive, organisations are becoming more digital, across the length and breadth of their operations. Payroll is no different, and it needs to evolve to support new working styles and practices, whether that’s paying new starters faster or adapting to increasing numbers of contractors and freelancers in the business.

"It needs to be flexible, fast and cost-effective, and in finding the right platform for it, businesses can overcome the barriers of rigid systems and unlock the strategic contribution adaptable payroll cut-off dates can provide."

The Office for National Statistics has recently found that the number of self-employed workers increased by 22 per cent between 2008 and 2015, and now it makes up an impressive 15 per cent of the UK workforce. This growth in freelancers has, unfortunately, not necessarily been met with change from the wider world of industry.

By Victoria McDonnell

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