Lance Talks Freelancer Banking, FinTech
Gig workers. Contractor. Solo preneurs.
Whatever you (or the regulators) call it, working for yourself can be both a rewarding and challenging work experience.
The freelancer reputation has been shaped by financial difficulties, working from paycheck to paycheck, or using part-time jobs to do moonshine and make a little extra money. Today, however, the professional community has evolved into an opportunity for stable income. According to Oona Rokyta, Co-Founder and CEO of FinTech Lance, freelancing became one of the most stable professional positions at the height of the pandemic.
However, as more professionals turn to solo work, their financial picture can get immensely mixed up.
“Most of the time, people are dependent on several sources of income [themselves] to monetize their skills instead of being dependent on a job, ”Rokyta told PYMNTS in an interview. When you start tracking multiple streams of income and getting in and out of them faster it becomes a major challenge for organizing your financial self. “
As individuals somewhere on the spectrum between consumers and small businesses, freelancers need banking tools that can support their individual needs on both the personal and professional side of financial management, she explained.
Find the sweet spot
“Even though I had an accountant and QuickBooks, I couldn’t get my cash flow and finances up to the point where I thought I was really up to speed,” she recalled.
Freelancers are, in a sense, their own small businesses. However, the real purpose of a career is to support personal life goals, whether it be saving for retirement, buying a new home, or taking a vacation. Hence, any financial services technology targeting the professional community must be able to do dual roles and meet both requirements.
At the same time, this single solution must make a clear distinction between these two worlds.
“It is important for freelancers to separate their business and personal finances and properly account for everything,” Rokyta said, adding that mixing finances can have a negative impact on tax calculations, personal savings, and more.
In the past, freelancers did not have access to tools that could automatically categorize business expenses and file taxes, while for example automatically depositing the appropriate income into a professional’s personal account.
Lance plans to fill that void, and investors have raised $ 2.8 million in seed capital to support this initiative. The company offers banking and account services from Blue Ridge Bank, while its debit card product is available from Visa.
Reshaping the professional economy
Connecting freelancers with adequate banking and financial services and products will be critical to the continued growth of the freelance economy, Rokyta said.
It’s already an ecosystem that may look very different from its reputation.
“The average freelance income is in the American middle class, about $ 60,000 a year,” she added.
These are not professionals waiting to be able to pay their bills on payday. While late payments from clients and customers can be challenging, the biggest cash flow problem can be traced back to the need to control and consolidate B2B payments, expenses, and expenses in financial analysis.
According to Rokyta, the financial services sector needs to take a more “proactive” approach to this customer segment, especially if this is to help the market develop further. Big changes are already taking shape. While the freelance economy has traditionally been divided into industry, Rokyta predicted that space would be viewed in terms of income class.
At the lower end – those making less than $ 50,000 a year – freelancers still rely heavily on platforms for work and income. High-quality freelancers like doctors and lawyers are now running “six digits” and therefore need more sophisticated accounting, billing, payment and other systems, she said.
Lance targets the middle that makes $ 50,000 to $ 125,000.
“People are really confused there,” remarked Rokyta. “They make money, they don’t live from paycheck to paycheck, but they don’t know how to organize their finances.”
By striking the right balance between streamlining and consolidating finances, payments and banking while maintaining this clear distinction between personal and professional finance, FinTech will have the ability to help these solo preneurs take advantage of the lucrative opportunities of freelance work – instead of standing in the way.
NEW PYMNTS DATA: CRYPTOCURRENCY PAYMENTS STUDY – MAY 2021
About the study: U.S. consumers see cryptocurrency as more than just a store of value: 46 million plan to use it to make payments for everything from financial services to groceries. In the Cryptocurrency Payments Report, PYMNTS surveyed 8,008 US cryptocurrency users and non-users to investigate how they would like to use Crypto for purchases, which Crypto they would like to use – and how merchant acceptance can affect merchant choice and consumer spending .