Loadchief talks about payments from independent contractors
The proliferation of the odd-job economy and dramatic changes in the expectations of professionals for their own career paths have started to carve out more space for the independent entrepreneur – and for the regulations that surround them.
The logistics and delivery space is designed to adopt the independent entrepreneur model, which in theory can provide the kind of flexibility in the availability of talent necessary for the ebb and flow of demand.
In reality, however, the logistics industry continues to suffer from a talent shortage, especially when it comes to drivers and delivery staff. According to Louis Esbin, CEO of Head of charge, addressing this bottleneck has more to do with supporting independent entrepreneurs and refining the independent entrepreneur model than with flooding the market with more drivers.
B2B payment and cash flow management strategies play a vital role in helping couriers and delivery people to optimize their relationships and their productivity.
“We want to be able to hone the independent entrepreneur business model,” Esbin told PYMNTS in a recent interview. “The way you do it is by giving drivers and courier companies the ability to decide how often payments are made. “
Dealing with cash flow slowdowns
Evolving regulations regarding independent contractors continue to have profound impacts on the workflows of industries that depend on this workforce, including the parcel delivery space.
Historically, drivers were employed by a courier or logistics company that would pay these professionals as they would any other employee: on a weekly or bi-weekly basis. But Esbin said the rise of on-demand service apps has coincided with growing demand from drivers for more frequent payments. The emergence of legislation, such as California Proposition 22, also means that companies can continue to classify their Delivery Network Company (DNC) drivers as independent contractors, with implications for wages, benefits and more. Moreover.
As independent contractors, he said, drivers can find it difficult to manage the financial health of their operations.
“These people who drive are [often] paying for their own insurance, paying for their own gasoline, car repairs, ”he said. “A lot of times they’re not the best at managing their cash flow. They need to have more frequent payments because they need to cover … the expenses they incur right away.
At the same time, the changing on-demand economy has also created a fragmented ecosystem of drivers and couriers who are not optimizing productivity.
A driver may complete a route or delivery and then have to return home to find their next gig, creating wasted time and energy that could be optimized for another delivery. It was this inefficiency that led to the creation of the Loadchief Marketplace, streamlining the ability for drivers and couriers to connect.
Adjust the independent entrepreneur model
The cash packages that independent contractors may face have created an opportunity for the Loadchief market to hit a Partnership with Velo Payments. Velo Payments Head of Corporate Sales, Business and Product Development Eric Fox told PYMNTS that this allows drivers to choose the frequency and method of payment.
“Giving the driver this option as to how they want to receive their payment or giving the courier the option of how they want to make their payment creates a much richer experience between the two,” Fox explained.
This kind of flexibility contributes to what Esbin has called a refinement of the independent entrepreneur’s business model. A courier can post a job offer on the market at his determined rate. But an agile payment strategy means the rate can go up or down depending on whether a driver needs to be paid earlier or can wait longer – a faster payment means a lower rate, while a longer payment term can result in a higher rate.
This is a function that is only possible through the independent entrepreneur model and not when these professionals are classified as employees, noted Esbin.
As regulations continue to change and adjust the definition of concert worker and independent entrepreneur, these professionals and the companies that rely on their talent will not look only to FinTechs and markets to meet the needs of the market. in relation to and management of cash flow. They will also seek technology partners who can support regulatory guidelines and compliance.
Esbin highlighted other opportunities to support the independent entrepreneur business model by fostering the development of an ecosystem of services and support within the market. By promoting compliance while promoting the financial health of all participants in this system, this model has the potential to work for all stakeholders.
“It’s about perfecting the business model of independent entrepreneurs and enabling these drivers to be independent businesses and operate independently,” he said. “At the same time, it’s about enabling the courier industry to meet the needs of its customers and the demands of its market that would otherwise be hampered by its inefficiencies and fragmentation.