Searching overseas for contractors? If it’s your first foray into the global talent pool, one of the best places to cast a net is in the U.K. There’s a lot to love about working with U.K. contractors, and there’s a reason that the first international expansion hub for many companies is London. The ability to work alongside other English-speaking contractors makes finding talent that much simpler. Nevertheless, there can still be challenges in figuring out how to pay contractors in the U.K.
Despite being the oversees sister country to the United States, there are surprising barriers to hiring and paying U.K. contractors. It’s important to understand these before you seek out talent across the pond. Here’s what companies need to know about hiring U.K. talent and how to ensure your new overseas workforce is paid appropriately.
Why hire contractors in the U.K.?
As mentioned, the single biggest factor in a company’s decision to hire U.K. contractors is often cultural familiarity. First and foremost, English as a common language offers a great deal of certainty in hiring freelancers. There are fewer communication gaps and no language barrier to overcome. Companies can expect to work with a contractor who has a full grasp of what they’re being tasked with. Alongside this, the concept of work culture is also very much the same, which can eschew worries about fit with the company or a broader team.
The other chief reason companies choose to hire contractors from the U.K. is to access European insights. For example, if your brand is breaking into Europe, it helps to have creative voices behind it to ensure it’s communicating the right message. The same goes for a product or service—it needs to land accordingly.
Finally, the obvious benefit of working with U.K. contractors is that they’re well-educated and have access to the tech and resources needed to be highly effective. You’ll have no trouble finding workers with post-secondary education, who are tech-savvy and familiar with first-world trends and concepts.
Currency and transfer considerations
When it comes to currency and transfer considerations, there are a lot of question marks surrounding the U.K. right now. After leaving the European Union bloc, the U.K. has reverted back primarily to the Great Britain Pound (GBP) as the primary form of currency. Moreover, the GBP is in flux due to Brexit turbulence. The result is uncertainty surrounding exchange rates.
Right now (July 2021), the United States Dollar (USD) to GBP ratio is roughly 1:1.38, which means paying a premium to work with British contractors. While the USD-GBP currency pair is a strong one, forex markets can be unpredictable in the wake of Brexit, causing exchange rates to fluctuate.
Ways to pay contractors in the U.K.
As another first-world, developed nation, contracting professionals in the U.K. means having plenty of ways to pay them. It’s smart for businesses to consider their options and choose the one that’s most applicable to the situation, which can vary from contractor to contractor, situation to situation:
- Wire transfers. Their cost makes them prohibitive for regular transfers, but wires are nonetheless the quickest and fastest way to pay contractors. They’re best used as a one-off measure for larger sums, to avoid incurring the many fees that come with international wire transfers.
- Check or money order. When contracting across the pond, there’s really no place for physical payments. Checks (or cheques) and money orders take too long to land via postal mail, which delays payment for the contractor and increases float time for business funds. That, and there’s virtually no traceability when it comes to physical payments in transit.
- Bank transfer. Bank transfers tend to be the de-facto mode of payment to contractors in the U.K. for several reasons. First, most professionals in this region are traditionally banked, which makes ACH an easy solution. Second, bank transfers are quick. The chief drawbacks come from currency exchange rates, which aren’t always transparent and could end up costing businesses more than necessary.
- Digital payments. Digital payments are on the rise because of their convenience and transparency. More and more U.K. freelancers opt for digital wallets and transfers because they have more control over their funds and transparency in the payment process. For businesses, there’s no beating the currency exchange rates and lack of fees.
Given the opportunity to work with U.K. contractors, there are no shortage of ways to pay them. It’s up to businesses to figure out the best solution on a case-by-case basis.
The best way to pay independent contractors in the U.K.
For many businesses, the U.K. represents an easy foray into working with a global talent pool. There’s familiarity, a shared language and a proven professional standard. It’s for these same reasons more and more companies are choosing to compensate these contractors through digital payments. If you’re wondering how to pay contractors in the U.K., digital payments offer a simple, familiar format—one both parties will enjoy using.
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