Contracting economy: how embedded finance is supporting the changing world of work

Contracting economy: how embedded finance is supporting the changing world of work

In our latest interview, we talked to Dania Kadi of Sonovate. This article looks at:

  • How the global workforce is changing
  • How embedded finance is solving problems for those at the forefront of this change

While lockdowns are now thankfully a distant memory, the impact of the coronavirus pandemic lingers in many ways. Not least the world of work.

For instance, between September 2022 and January this year, 28% of adult workers reported both working from home and travelling to work. Compare this to 2019, when around only 12% of workers worked from home at some point during the week. It’s clear that for many businesses and employees being able to work from home is, well, working quite nicely.

Another well-known impact of the pandemic has been the acceleration of digital technology adoption. While it perhaps attracts less attention than the debate over whether people ought to be ‘in the office’, it is undoubtedly having a much bigger impact on the economy. From the tools that are being developed to automate time-consuming processes to the new skills that workers are continually having to learn, there’s only one new normal in town and that’s change.

Meeting the needs of the recruitment sector

One company making good use of modern technology to reshape the employment landscape is Sonovate, which has lent more than £3.5bn to 3,300 businesses in 44 countries since 2014. A B2B embedded finance platform that delivers both finance and back office functionality, this Cardiff-headquartered startup is helping recruiters and labour marketplaces to better manage today’s mobile workforces. 

Its Head of Marketing is Dania Kadi. She says Sonovate is helping to ensure that around 40,000 people are being paid in full and on time for the services they provide.

“We’re the leading funder for recruiters and consultancies who place contract workers. We exist because we know that companies can struggle to pay contractors – that’s why it’s important, if you’re a recruiter and are hiring contractors for end clients, that you have good funding options that can help workers be paid on time, while providing clients with good payment terms,” she said, adding: “We also offer back office services that are appreciated by smaller recruitment agencies, because we free them up from burdensome tasks like timesheet processing and contract creation so they can focus on growing their business.”

Dania told us that many of the businesses Sonovate works with were facing challenges on two fronts. Firstly, there’s the general worry over the state of the economy and the knock-on effects of a potential recession on employment, coupled with a wider talent shortage.

“The second is the rise in freelancing and the demand for flexible working. Both recruiters and employers are having to figure out how this is going to evolve. To us it looks like there will be more growth in temporary employment contracts, which is beneficial if you’re in the recruitment sector.

“But there are a lot of culture changes for employers to accommodate, such as teams not being together face to face. Our research shows that 67% of businesses understand that flexibility is key in competing for the best talent, but only 16% have increased the number of roles that can work flexibly or remotely. Additionally, not all of the workforce is working 9 to 5 and employers are having to balance different weekly and daily rates, holiday entitlements and colleagues in different countries. Financial technology can really help with this new complexity while ensuring compliance with a range of legislation,” she said.

How Sonovate differentiates from the competition

A key point of differentiation with Sonovate as an embedded finance provider is the provision of 100% funding without concentration limits. The rationale behind this approach is that many small recruitment agencies in early growth stages are dependent on a large client and need as much help as possible to expand.

Sonovate is able to mitigate the risks associated with this approach by calling a mix of traditional and non-traditional data sets, coupled with debt protection products. This paves the way for a more bespoke offering which incumbent finance providers struggle to match.

It also happens to be one of the reasons why Sonovate is growing and bringing new people on board. And while the business enables payments in more than 40 countries, it works predominantly with companies headquartered in the UK. However it does have plans to expand its presence overseas to serve firms based in other markets.

“Ultimately, our technology works – it’s solving problems for our customers and it’s backed up by expertise. We’re providing funding, but also industry expertise and a lot of useful content to the people we work with. We’re also really well networked in the industry and have partnerships across insurance and banking. All in all it’s a strong system,” Dania concluded.

Further information about Sonovate’s embedded finance platform can be found here.





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