There are definitely benefits to being a freelancer: the ability to set your own schedule, choose your work, work from wherever you want, and more. But there are also areas where it is more difficult than having a traditional job, especially when it comes to payment.
Permanent, traditional jobs have a regular payment schedule with taxes included, so it’s easy to know when you are getting paid and how much. But for freelancers, payment terms are often dictated by each individual client, meaning each project could have different payment details and schedules. Freelancers often have to submit lots of personal financial information and fill out payment forms for each client and then wait until the client is ready to pay–sometimes 30 or 60 days after the work has been completed. Even if the work is somewhat consistent, freelancers always face up and down months as they wait for payment to come in and then try to tackle the complicated world of independent contractor taxes.
But with every challenge, there is an opportunity. As the gig economy grows and more people turn to freelancing, banks and financial institutions have a unique opportunity to up their game and change their offerings to help freelancers in the unique and challenging payment space.
There are lots of possibilities of how banks could put freelancing programs into action. One idea would be for a financial institution to create a way to track income streams and analyze cyclical work patterns. This would help freelancers predict what months will be good or bad and help them know the best times to put away money to save or when to stick to a stricter budget. Think of it as a personal income generator predictor that takes all of the income flows and synthesizes them together to create a full version of what a freelancer’s financial situation and schedule looks like. Another idea would be to have banks pre-populate financial information so that freelancers would simply log on to their accounts and send a verified financial profile to potential clients with one click instead of filling out the same forms every time. A streamlined system could make it much easier for freelancers to send out financial information and to track where their money is coming from.
There are other potential solutions that could work for freelancers and traditional workers alike, such as processing payments in real time instead of forcing banking customers to wait a few days. A streamlined financial dashboard that is easily accessible on a computer or mobile device could help customers quickly see their various income streams; this could be particularly helpful for freelancers to quickly see what payments have come in from various clients so they can have a snapshot of their current financial situation.
There are also things that can be done to ease taxes for freelancers, which can be quite an arduous process. Simplifying forms so that freelancers don’t have to fill out as many things for the IRS could speed things along, as could an updated tax code and training for tax professionals who regularly work with freelancers.
The growth of the gig economy is changing the face of the workplace and also having an impact on the payment space. Although many organizations are still in the mindset of only working with full-time traditional employees, more and more people are bucking the trend and charting their own independent career path. Banks and financial institutions looking to get ahead would be smart to find ways to appeal to freelancers to make the payment, billing, and tax processes as simple as possible.
Article Courtesy of INC.com CLICK HERE to access original article.
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