Ask any worker, anywhere in the world, what their favorite day is and you’ll likely get the same answer: payday. Getting financially reimbursed for your time and effort not only feels great, but it remains one of the top reasons to get a job in the first place.
Though the promise of getting paid for the work you do hasn’t changed in years, new technologies have shifted how we view work and payment, especially among freelance workers who crave a faster alternative to paper checks.
With the widespread adoption of smartphones and digital banking, as well as the continual rise of freelance and contracting work, most workers in the “gig economy” are staunch supporters of getting paid electronically.
According to a July 2018 survey of more than 1,400 American freelancers and contractors, conducted by digital payment service Bill.com, roughly 86% of respondents said they wished to receive digital paychecks from their employers. Some workers took their preference even further, with 41% stating they required digital payment before taking on a gig.
René Lacerte, founder and CEO of Bill.com, said the growing insistence for getting reimbursed electronically will continue to increase in the coming years.
“The gig workforce, and their influence, is poised to continue to grow each year as companies look to expand their workforce and Americans embrace a more flexible lifestyle,” said Lacerte. “Digital payments not only meet the needs of both parties, but they do it quickly and with less hassle.”
The payment problem
Ever since the Great Recession in 2008 and the subsequent recovery period, a growing number of Americans have taken to either supplementing their incomes or basing their entire livelihoods on freelance work.
According to an August 2018 Gallup poll, approximately 57 million Americans are part of the gig economy. When asked in the Bill.com survey, most respondents said a major issue facing this growing segment of the population was getting paid.
For Beverley Rose Nevalga, a freelance communications and marketing consultant, the process of getting reimbursed for her service through the use of digital services and direct deposit is something she calls “crucial to my livelihood.”
“A majority of my clients prefer [digital] payment as well,” she said. “Not only does it untether me from a physical location, I’m also able to partner up or engage with talent from across the globe who are open to a similar arrangement.”
The (digital) check is in the mail
Doing freelance work for a living has its benefits, from a completely self-made schedule to the comfort of working from home. One of the major drawbacks that most freelancers keep coming back to is the consistency and speed of getting paid. After all, your bills don’t slow down while you wait for your client to pay you.
According to a recent study by Australian outsourcing platform Airtasker that surveyed more than 940 freelancers, the two biggest barriers to becoming a freelance worker on a full-time basis were the pay and the availability of work. Conventional jobs are still prized by workers who prefer to earn a consistent paycheck at regular intervals.
More than half of respondents (54%) to the Bill.com survey said it took too long to get their money, and 45% said their clients don’t pay on time. Liz Steblay, founder and CEO of the Professional Independent Consultants of America (PICA), said those in the gig economy are hit hard when payment is stalled.
“All small businesses struggle with cash flow, and self-employed professionals are no exception,” she said.
For Rose, those figures are consistent with her own experience.
“Unless you’ve arranged for a direct deposit, you’re at the mercy of the employer to pay up,” Rose stated. “And in the most unfortunate cases, they may not pay at all, which requires follow-up.”
Of the more than 1,400 people surveyed, more than half said they were still receiving their money in the form of a physical check. Steblay said cashing or depositing a paper check has become too much of a hassle in 2019.
“Most corporations have payment terms of 45 days or even 60, which is brutal when you’re self-employed,” Steblay said. “To add insult to injury, it’s surprising how many clients still pay by hard-copy check, which can easily add another week to the payment process. With more and more professionals becoming self-employed, the companies that offer faster, more reliable payments will win the best talent.”
Respondents said getting paid digitally usually meant they were getting paid on time. Of those asked, 81% said their customers who paid digitally tended to pay on time. Another 63% said they “felt more valued” when paid online.
That being said, Rose points out that there are still some downsides to only receiving digital payments, including a transfer delay as a security measure to protect against fraud and transaction fees.
“[As a freelancer], you must fold the transaction fees into your rates in order to avoid losing money, she said.
Regardless of the downsides of fees, digital payment is so paramount to some freelancers that 9% said they turned down work from customers who didn’t support their preferred method of payment.