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#6 How APIs are helping freelancers get their money faster

04 February 2020

How have technologies like APIs provided the means for FinTechs to connect businesses to financing that they wouldn’t normally have access to? We share our insights from our conversation with Paid.

In the next episode of our New Frontiers podcast series, we spoke to Natasha Foster, co-founder and COO of Paid.

Paid are a graduate of the Barclays Accelerator for FinTechs, and operate as a work management and payments platform. They offer a form of invoice finance – giving their customers an instant payment against invoices, leaving them to take care of chasing payments instead.

We wanted to find out a little more about how APIs and other technologies are helping microbusinesses and freelancers spend more time working in their business, and less time working on their business.

Sean Duffy
Head of Technology, Media and Telecoms at Barclays

Microbusinesses and freelancers struggle to grow due to financial obligations

Over the last 10 years, there has been a significant increase in the number of freelancers within the UK economy, and as of last year, 76% of all UK private sector businesses were either freelancers or microbusinesses.

As with a business of any size, late payments and the impact that has on cash flow can be terminal. According to Natasha, in the past ten years, there has been a 50% increase in late payments.

Natasha explained how the fear of late payments has the ability to impact crucial decision making within a business, delaying important decisions with regards to investing in growth. She explained how 40% of microbusiness owners don’t want to invest in the growth of their business, and are halting the progress of their business through having a cautious mind set. That’s as well as the stress and anxiety that chasing overdue payments can cause the individual.

More needs to be done to help microbusinesses and freelancers

On average, according to Natasha, around 50,000 microbusinesses go bankrupt every year due to late payments. The government recently launched the Small Business Commission with the purpose of identifying companies that pay late and to help microbusinesses collect late payments. While this commission has no legal power, it can pressure companies to confront late payments, in part through naming and shaming persistent late-payers.

The Prompt Payment Code was also set up by the government, which is a voluntary scheme whereby companies sign up with the promise of paying on time, and legislation such as the Late Commercial Debt Act allows businesses to charge 8% interest on late payments. However, many microbusinesses are wary of charging interest and feel like they don’t have the business leverage to charge their clients.

Natasha explained how large companies are not the villains and that often vendors struggle to pay microbusinesses back on time due to administrative hurdles. Different teams such as a procurement team, accounting team and a business team can sometimes fail to communicate with each other, leading to delays repaying the invoice. Paid attempts to help businesses with this administrative burden as well.

APIs enable businesses to manage their finances and accountancy smoother

With Paid being built from the ground up, using APIs at its core, the app is able to integrate smoothly with other digital services, notably accounting software – especially relevant with Making Tax Digital arriving this year.

By integrating their platform with different software types, Paid are able to offer a diverse set of services for microbusinesses and freelancers to utilise. The same technology is also used by Paid to help vendors manage invoicing, by helping them to integrate different components of their legacy system into a more streamline one.

However, for Paid to be able to offer the services they do, there’s a need for a mass adoption of digital products by microbusinesses and freelancers. With an increasing demand for digital streamlining from customers, businesses themselves need to embrace digital transformation.

What’s the Barclays Accelerator Programme?

The Barclays Accelerator Programme is an intensive 13-week programme designed to accelerate the development of start-ups. As a graduate of the Barclays Accelerator for FinTechs, Paid were able to work with members of Barclays across different business areas to develop the skills needed to push their business forward. They also worked with Techstars and other leading entrepreneurs and FinTech industry experts to develop the insights and skills needed to thrive in the FinTech industry. For more information about the accelerator, visit our website.

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