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The Five Cs of Contracting

By 11 September 2023No Comments

Contracting is the future of the workforce. Gig Economy, Contingent Workforce, there is a number of phrases that have been used to define this new workforce mindset, but what are some of the key components of this new workforce?

What are the 5 C’s of Contracting?


As a contractor, ensuring that you are compliant is essential – you do not want to get caught up down the track because you made a mistake. This could be ensuring that you are aware of your tax obligations or making sure you have the relevant insurances.

Depending on how your contract stipulates that you will be paid will affect who has to ensure compliance. If you are being pay rolled on a regular salary by the company, then they will be the ones responsible for the compliance of paying payroll tax. However, if you are invoicing the company for your contracted services, then you are liable for ensuring you pay the necessary taxes and abide by the Personal Service Income Rules. So you have to ask yourself, are you a contractor or will you be seen as an employee?

Cash flow

As the old saying goes, cash is king. It is crucial that contractors have a steady cash flow, and that they do not get caught out by unpaid invoices and finding themselves struggling to find the money during a dry spell of work.

Cash flow is the net change, it’s your cash position from one period to the next. If you have taken in more cash than you send out, then you have a positive cash flow. You have a negative cash flow if you have more cash outflow then inflow.

Contractors need to find a contract, and then they are reliant on their invoices being fulfilled on time. Further, a contractor needs to take into account tax and super.

If contractors are unable to get the cash then bills will go unpaid and pile up. It is possible to borrow money, but that makes the entire process more costly, so having the money and a strong cash flow is essential.


Is contracting the right avenue for you? Cost does not just refer to the monetary cost, but also the cost of time. If you take your salary, and you multiply that by three times, and then you divide that by 220 days and then you divide that by 8 – that will give you an hourly rate for your value of your time.

If your contract requires you to invoice and take care of your own compliance, this can cost you in time, as well as physical cash. There are services available to make contracting less stressful and to give your time back, such as payroll or contractor management companies. If you calculate your hourly rate and find that the amount is greater than the cost to make use of these outsourced services, it might be worth considering.


If you are contracting it is essential that you are confident. You have to confidently present yourself to earn your next contract, to network and build connections and you have to have the confidence to chase down that outstanding invoice to make sure you have that cash flow.


The contingent workforce, the gig economy, whatever you like to call it, the workforce is pushing toward this flexible contractor driven model. With both employers and employees are embracing this new approach, it is destined to become the new normal of the working environment.


Pendragon look after the annoying administrative hassles involved in contracting and keep you compliant. So you can get the most from your contract income and have more time to put your feet up.

For further information please don’t hesitate to contact us, book an appointment or reach us at [email protected] or 02 9407 8700 where one of our Australian team members will gladly help you.


Pendragon Team