Finding a Finance Firm to Help You Thrive in the Gig Economy
Staffing Stream
Finding a Finance Firm to Help You Thrive in the Gig Economy
Main Article
The gig economy emerged in the wake of the recession 10 years ago when high unemployment made temporary workers easy to find. Employment conditions have changed considerably since then, yet there is no sign that the gig economy is going away.
With the US unemployment rate at 4.1% and a record 6 million job openings, you might think that the market for temporary or contract workers would shrink as job-seekers secure full-time, permanent positions.
But the opposite is happening. Overall, there may be as many as 68 million “independent” workers in the United States, according to a McKinsey Global Institute estimate. And projections show that by 2020, nearly half of the US workforce will be doing some level of contract work. Because of the flexibility it brings to both employers and employees, the gig economy is becoming a permanent part of the job market worldwide. And that’s forcing all of us to reexamine and reinvent the role of employment, especially temporary employment.
Reinventing the Workplace Model
In its 2017 The Future of Technology report, Accenture says technology is the driving factor behind the gig economy. Digital-born companies, the report says, are able to leverage technology to create a workforce marketplace that matches companies and staffers in highly personalized ways. In addition, technology allows people to do many jobs from remote locations, helps employers manage employees and job processes, and can give business a competitive advantage globally.
It makes sense that technology can help businesses and the staffing industry that supports them move quickly into a brave new world. Yet, as the gig economy grows – as companies and employees take advantage of the flexibility that comes with temporary staffing arrangements – the two biggest concerns we hear about from the staffing industry have little to do with technology:
- Finding the right people for the right jobs, and
- Collecting on the staffing contracts.
The two issues are closely tied together. Finding and delivering the right people with the right skills at the right time is key, but you have to pay them on time or you won’t be able to deliver them again next week.
PREMIUM CONTENT: Toward a Reskilling Revolution
Unique Needs of the Staffing Industry
The staffing industry is becoming a fundamental part of the US economy. As the industry reinvents itself and adjusts to the phenomenal changes brought about by the gig economy, cash flow shouldn’t be an impediment.
Historically, meeting payroll can be one of the unique challenges for the staffing industry. Staffing companies send workers into the field and typically need to pay their payroll wages, taxes and insurance weekly. But the employer usually has 40 or more days to pay the staffing company for that employee’s work. Covering the weekly payroll creates a financial gap that begs for access to capital.
Staffing firms require a Finance Partner that recognizes the unique challenges facing their industry. To find such a partner many Staffing Companies have turned to Alternative Lenders, outside of the traditional banking market. These lenders need to be service-oriented, and understand the nuances of the industry. Alternative Lenders can provide speed and flexibility that is hard to replicate in a regulated environment. For these reasons many staffing companies are now financed outside of regulated banks, which is a trend we expect to continue. For these reasons we are building a dedicated focus on Staffing as we expect this industry to continue to expand for many years and we plan to be their partner to service their needs and fund their future growth.
Riding the Wave of the Gig Economy
For staffing companies in the market for a finance partner, here’s what to look for:
- A service-focused firm dedicated to meeting your unique needs.
- A company with experience in the staffing industry.
- A company with a multitude of financial products to meet the needs of staffing companies of all sizes.
Don’t just take the first product that is offered. Take the time to understand what is available and the benefits and drawbacks that each offer.
As a wide variety of industries continue to turn to temporary or contract staffing arrangements, the role played by staffing companies will continue to grow. But the industry’s unique challenges remain. In order to smoothly ride the wave of the gig economy, staffing companies need to partner with the right financial organization. Talking with a service-based financial firm that provides customized and efficient capital to small and middle market enterprises is a good place to start.
Author
Latest from this author
Sorry, there are no more articles for this author.