Contractors now have the ability to operate more efficiently, thanks to the utilization of fintech, covering tasks such as invoicing, receiving payments, and staying compliant with IR35. Furthermore, this technology is empowering companies to easily identify top talent and scale up their operations.
Increased Demand…
There has been a significant surge in the number of people leaving their full-time jobs to venture into freelancing. Similarly, companies are increasingly hiring contractors to support their ambitious growth strategies. Consequently, the European Union’s freelance workforce segment has expanded by 45% since 2000, highlighting the substantial focus from investors and innovators towards this sector.
Various sectors including restaurants and events, construction, and IT have witnessed a considerable rise in contractor registrations through umbrella companies. However, other industries also have the potential to effectively embrace contracting.
Technological advancements are the driving force behind the expanding community of contractors, providing them with the capability to carry out numerous tasks online, from payment collection and client invoicing to compliance with IR35 regulations and tax filings.
Compliance Focus
Fintech plays a crucial role in helping contractors stay compliant with the latest tax regulations, particularly IR35. This legislation, introduced by the UK Government in 2000, aims to prevent contractors with a permanent position from reducing their taxes by operating through a limited company.
Additionally, technology assists contractors in managing their bookkeeping and accounts, with schemes such as HMRC’s Making Tax Digital further accelerating its adoption by mandating online tax and VAT return submissions using compatible software.
Moreover, fintech enables freelancers to request and accept payments in different currencies, allowing them to operate and offer services in diverse locations, providing them with new opportunities.
Talent Acquisition
Amidst economic challenges, companies have been forced to make staff redundant, leading to an increased reliance on freelancers to fill the void. Technology has streamlined the onboarding process and management of these contract workers.
Organizations can now utilize technology to conduct rapid and compliant document checks on new contractors, rather than resorting to time-consuming manual processes. Furthermore, fintech enables businesses to source talent globally and conduct cross-border transactions with ease.
Facilitating Expansion
Although fintech offers numerous advantages, it is essential for businesses and freelancers to ensure that the technology implementation aligns with current legislation requirements. This includes embedding compliance with existing laws and allowing for future infrastructure updates.
Scalability is crucial, requiring adaptation to different tax, legislation, and cultural norms while setting up operations in new countries. Technology now provides a more reliable and efficient approach compared to the previous reliance on hiring locals.
Both contractors and employers stand to gain significant benefits from fintech. With a growing number of individuals transitioning into the contracting realm, the demand for faster and more efficient technology is expected to rise, presenting an area where Cool Company is proud to lead the way.
About the author
Kris Simpson, Country Manager UK at Cool Company, the fastest-growing umbrella company simplifying and streamlining administration for recruitment agencies and contractors. Cool Company provides freedom for contractors without bureaucracy while offering businesses access to specialized talent without the need for new hires or the administrative burden associated with contract recruitment.
