Getting Paid in the Gig Economy
Freelancers now represent 35% of the US workforce. They count for 55 million workers and together earned $1 trillion working in the gig economy in 2016.
Companies appreciate the benefits contractors or freelancers offer. Businesses can bulk up or scale down on resources as needed, costs are lower since they aren’t direct hires, and talent is abundant.
Paying them, however, presents a sizeable challenge.
As one business owner shared: “Checks take too long. PayPal costs contractors 3%. There’s got to be a better way.”
The problems with paying gig workers
On a fundamental level, companies can enforce a standard process with employees. They have the same benefits, pay schedule, tools and more.
Freelancers break the mold. The number of freelancers you hire fluctuates (think seasonal or project-based work). Payment amounts and schedules can vary according to each freelancer’s terms. All of this translates to big headaches for companies paying gig workers.
Common payment methods – and their pitfalls
As the business owner said above, paper checks do take too long. Employees need to verify each invoice and its amount. Once approved, checks must be printed and placed in a pile to await an authorized signature. Then, each one must be stuffed into an addressed envelope, stamped, and mailed. In addition to requiring a large amount of time, the expense associated with the process adds up when you consider the labor and supplies involved. This bulky process continues even after mailing, as you wait to reconcile each check or have to deal with returned checks.
Some business owners turn to PayPal to send money to freelancers. While moving to a digital payment process undoubtedly makes more sense than paying by check, fees can accumulate. Take PayPal, for example. For each transaction, PayPal requires a 3% transaction fee. That fee can be paid by the freelancer or the company. Either way, the fees add up.
The alternative digital payment system for freelancers
Bill.com offers a digital payment system truly engineered to accommodate business needs in the gig economy by streamlining the management and payment of freelancers. Here’s how:
1. Businesses can send freelancers ACH payments. Automated Clearing House payments transfer money from the organization’s banking account directly to the freelancer’s banking account. There’s no need to cut checks, mail them and then wait to reconcile them. The immediate deduction from the company’s side means a clearer view of cash flow. Freelancers particularly appreciate the direct deposit, as it means no waiting for a check to arrive, no need to deposit at the bank, and no waiting for the check to clear.
2. The fees are lower. Organizations that use ACH payments through Bill.com only pay 49 cents a transaction. This represents a vastly less expensive option.
3. All payment transactions are automatically tracked and auditable. A contractor calls to ask about payment. With one login, an authorized company representative can access Bill.com and pull up payment information—everything from when the invoice was received, who reviewed it, when it was approved & sent, and confirmation of payment. This creates an audit-compliant payment process for your company, making it easy to answer freelancer payment questions.
4. Businesses can automate payments. You can schedule recurring payments through Bill.com to freelancers so that each contractor is automatically paid each month (or in accordance with the payment schedule.)
5. Bill.com integrates with leading accounting systems like Xero, QuickBooks, Intacct, and Netsuite. The integration means each payment is automatically synced with your accounting system, eliminating extraneous data entry.
Streamline the payment and management of your freelancers today by moving to Bill.com.