As companies increasingly turn to gig workers for short-term projects, and workers see the gig economy as more than a “side hustle,” faster payments are set to become a top priority. The following Deep Dive examines how flexible prepaid cards could change how gig workers’ field-related expenses and help them avoid paying out-of-pocket costs for employers.
According to PYMNTS’ most recent Gig Economy Index, 33.8 percent of U.S.-based workers have participated in the gig economy in some capacity. That economy is evolving, as are its workers’ payment preferences.
Forty-seven percent of surveyed gig workers reported having a full-time job in Q2 2018, and 75.5 percent said they would not quit their gig work to take on a full-time job. This could be a sign that they are seeing the gig economy as more than a “side hustle” or opportunity to earn extra cash. These gig economy gains have been impressive, but offering workers more flexible payment tools to quickly complete jobs in the field — and sidestep the cumbersome reimbursement process — could encourage greater participation.
Hiring gig workers, rather than full-time employees, can be appealing to employers, too. Tapping into the pool of short-term workers means employers can avoid offering full-time benefits like healthcare, and also saves them from having to deal with additional labor costs.
Businesses that rely on gig workers, though, should note that the right set of payment tools and practices sows stronger relationships. This Deep Dive examines potential workforce spend management use cases for companies and gig workers alike.
Making Reimbursements Less Of A Production
Like traditional workers, gig workers appreciate expedience when it comes to getting paid. In fact, the Gig Economy Index found 84.5 percent of those surveyed would take on more gig work if they were paid faster.
Helping freelancers avoid work-related expenses could also encourage greater participation. Workforce spend management solutions could provide them a better option for taking on gig-work-related debt, and help employers manage funds spent.
Consider the production space, for example. It includes anyone from set designers and lighting crews to actors and digital effects specialists, each needing to purchase a wide range of materials to complete their roles. Production heads typically manage these crews and, as a result, constantly handle unexpected expenses. They must be able to understand labor and item costs required to complete a production, and work carefully to set and abide by a budget.
Workforce spend management solutions, like prepaid cards, can help production managers — and the accountants who work with them — to better track spending and reconcile expenses. They provide tools to keep tabs on budgets and provide real-time insights into how money is used, and can be issued with preset controls that impose limits on the types of items that can be purchased.
The same solutions can shield gig workers from the financial burden of paying out-of-pocket for work-related expenses. Instead of swiping personal credit cards for building materials or software subscriptions, and waiting weeks to get reimbursed, workers can use flexible payment cards to pay for these items.
Managing A Remote Sales Staff
Gig workers are also taking on the role of sales professionals, with many companies hiring them for travel-based assignments. According to research from Harvard and Princeton economists, independent contractors now make up 8.4 percent of the U.S. workforce, or approximately 12.5 million workers.
These contractors incur various expenses as they travel, including meals, gas and parking. Workforce spend management solutions could arm them with prepaid cards to use without dipping into their personal funds. Such cards can also save them the step of holding on to physical receipts to be reimbursed for out-of-pocket expenses, and spare employers from reviewing manual receipts and expense reports.
These time-consuming practices take a toll on employer and gig worker relations, according to a recent research. A survey from accounting software solutions FinTech Tipalti found that 74 percent of respondents would consider leaving an online marketplace because of poor payment processing habits. The same survey pointed to problems gig workers currently face concerning the pace of payments. Approximately 29 percent reported problems with not getting paid for their work, while 27 percent reported being paid late.
This is an issue the gig economy will need to resolve, and fast, as a separate report from payroll company ADP noted that reliance on gig work is likely to increase in the coming years. Roughly 80 percent of U.S. firms currently employ independent contractors, and this trend shows no sign of slowing anytime soon.
As an increasing number of companies hire gig workers, addressing the pain points they endure could pay long-term dividends. Those embracing workforce spend management solutions could not only be investing in greater control and insight into how remote workers are spending money, but also be doing so in relationships with workers they can trust to do the job right.
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