Published on petlpay.com/blog | Category: Agency & Professional Services, Payments, Future Of Work
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If you run an agency or professional services business, you already know the pain.
You’re more than likely managing a distributed team, some employees, mostly contractors and freelancers. They’re operating across different countries, and they’re invoicing you in different formats, on different timelines, expecting payment in different currencies. You’re probably reconciling it all manually in Xero, paying out via Wise or bank transfer, chasing approvals over Slack, WhatsApp and email, and hoping nobody has miscategorised their tax status…if you’ve even thought that far (you should be!).
It can feel more like a workaround than a modern-day workflow.
We know, because we lived the problem first-hand. Our founding team ran Rafiki Works, for over 2.5 years, across over 40 projects between the US, EU, LatAm, and South Africa, pushing hundreds of thousands of dollars through a myriad of software, platforms, and tools as we explored various time-tracking, invoice, accounting, payroll, and payments strategies for both our clients and our teams of contractors.
The tools that exist today were built for a different problem, in the old way of work. This post is about what they get wrong, what the actual requirements are, and what payment infrastructure for agencies and professional services businesses should look like in 2026 and onwards.
The agency payment problem, precisely defined after “living the problem” for over 2 years.
Before diagnosing the tooling, it helps to be specific about the problem.
An agency running distributed projects is managing something like this simultaneously:
- A project fee received from a client in GBP
- 3-6 contractors who need to be paid on project completion, some UK-based, some in South Africa, LatAm or Eastern Europe
- Different tax obligations per contractor: UK-based contractors may fall under CIS or IR35; South African contractors need compliant cross-border payments; EU contractors trigger different VAT treatment
- An invoice approval workflow that currently lives across a mess of email, Whatsapp and Slack
- A reconciliation step that requires someone to manually update Xero after every payment
- A cash flow question: do you have enough to pay everyone out before the client invoice clears?
Those are the real-world problems. Now let’s look at what the current tools offer.
What the current tools actually do
- Xero / QuickBooks
- Accounting tools. Excellent at recording what happened. Not built to make payments happen, or record live-time, natively across projects (i.e, not on a per-person, or per business basis) and certainly not built for multi-party project disbursements. Xero will tell you that invoice 247 is overdue. It won’t automatically split the incoming payment across your six contractors, calculate compliance obligations per jurisdiction, and settle each one on the appropriate rail. Nor will it do so from WhatsApp or Slack, which is where you’re conversing already, right?
- Wise
- Excellent for point-to-point international transfers. Reasonably cheap, fast, and honest about fees. But it is a transfer tool, not a project payment tool. Every payment is still manual. There is no project context, no invoice generation, no compliance layer, no reconciliation. You are still doing all of that work elsewhere.
- Deel / Remote
- Built for employment compliance (and the enterprise for the most part), making sure your international hires are correctly classified and compliantly employed. Powerful for what it does, but it’s built natively around employment, not flexible teams, pop-up projects, and subcontractors, and it’s bloody expensive and slow. It’s not built for the fluid, project-by-project contractor relationships that agencies actually run. The pricing reflects this; it is expensive per head, and the overhead makes no sense for short engagements or milestone-based project work.
- Payoneer
- Mass payouts at volume are useful if you are running a marketplace with hundreds of payees, but again, it’s not built for the project layer. No automatic invoice generation, no approval workflow, no compliance handling. A transfer rail with a dashboard, not a project payment infrastructure. And next to nothing is accessible directly from chat, whether that’s WhatsApp, Slack, ChatGPT or Claude...enter Petl Pay…
- Your current WhatsApp + Xero + Wise stack
- This is what most agencies actually use. It works…up to a point. The failure modes are predictable: an invoice gets missed, a contractor chases payment via text, someone forgets to reconcile, and the month-end is a scramble. The administrative overhead is a pain, with industry research putting it at 6-10 hours per month for a small agency just managing contractor payment admin. That’s completely unnecessary.
What agencies actually need when it comes to payments and compliance in 2026
The requirements for agency and professional services payment infrastructure are specific:
1. Project-level financial management
Payments need to be anchored to projects, not to individual businesses or people. When a client pays a project invoice, the system should know which contractors worked on that project, what they are owed, and how to route each payment correctly. This is not how any current tool works. You’re likely manually connecting these dots every time.
2. Multi-currency, multi-rail settlement
Your contractors are not all in the UK. The payment infrastructure needs to settle GBP, ZAR, EUR, and USD, via a combination of open banking, local rails, or stablecoin, without requiring you to maintain accounts and relationships on each rail separately.
3. Compliance per jurisdiction
UK-based contractors working in construction fall under CIS, a mandatory deduction at source with monthly HMRC filing. UK freelancers in professional services may trigger IR35 considerations. South African contractors need compliant cross-border payment documentation. EU contractors have VAT treatment implications. None of this should require a manual compliance review for every payment. It should be native to the payment flow.
4. Invoice generation that does not require the contractor to be good at admin
Most contractors aren’t good at invoicing or admin. In fact, in our experience, they're terrible. And that's fine, let them focus on their core expertise, getting stuff done! An agency that requires a contractor to send a correctly formatted, compliantly structured invoice before they can be paid is adding friction that slows everything down. The infrastructure should generate the invoice from the work logged, automatically, compliantly, and ready for approval. Time logged, invoices generated, and payments initiated should be accessible via whatever chat platform or LLM the contractor is using.
5. One approval workflow, not four
Right now, your approvals likely happen across email, Slack, WhatsApp, and in-person conversation. We’ve experienced this; it can quickly become a financial, operational, and logistical disaster. There’s no real audit trail and no single repository where you can quickly see the status of every invoice or payment across every active project. This needs to be one workflow, accessible from anywhere (including any form of chat or LLM), with a clear audit log.
6. Automatic reconciliation with your accounting software
Every payment should land in Xero automatically, categorised correctly, and matched to the right project and invoice. No manual entry. No end-of-month reconciliation sprint.
The cross-border contractor problem specifically
Paying contractors internationally is the sharpest version of this problem.
At Rafiki Works, the fractional talent marketplace that Petl Pay spun out of, we processed over $400k+ across 40+ projects, paying contractors across South Africa, Eastern Europe, and the UK. We used a combination of Wise, local bank transfers, and manual reconciliation. It worked..But it also cost us significant time, wasted money, and created compliance uncertainty at every step.
The specific problems we hit:
FX costs compound across a project.
Every Wise transfer carries an exchange rate spread. On a small payment, it is negligible. Across a project with six contractors in three currencies, it adds up, often ~4% of total project cost disappearing in FX friction.
Local rail availability is inconsistent.
Getting money into a South African bank account quickly and cheaply requires access to local rails. Most international payment tools route via SWIFT, which is slow and expensive. Stablecoin settlement (USDC) is increasingly the most practical solution for cross-border contractor payments - instant, near-zero cost, and accessible to any contractor with a Petl Pay wallet.
Compliance documentation is manual.
Every cross-border payment to a contractor needs documentation for both the paying entity and the recipient. Tax treatment, contractor status, and payment purpose - all of this needs to be recorded. Currently, this is a manual process that most agencies handle badly, if at all.
The cash flow gap is real.
Clients pay on 30-60 day terms. Contractors want to be paid on completion. That gap - sometimes 60-90 days- is more often than not funded out of the agency's working capital. Embedded financing against confirmed invoices is the structural solution and does not exist in the current tooling.
What this looks like when it works properly
Here is the workflow that agencies and professional services businesses should have access to:
A project is created in Petl. Contractors are added, each with their jurisdiction, status, and payment preferences recorded once. Work is logged via the platform, or a chat interface, such as WhatsApp, Slack, ChatGPT or Claude, not a form. Petl generates compliant invoices automatically for each contributor. The project lead approves and payment is routed to each contractor on the correct rail. Instant payments across GBP or EUR via open banking, ZAR or any currency within LatAm via local rails, USD via USDC, automatically.
For the contractor, they described their work, and they got paid. No invoice software. No chasing. No waiting.
For the agency: one approval, full visibility across all active projects, automatic reconciliation, and compliance handled per jurisdiction without a manual review.
The whole workflow - from work logged to payment settled - runs in minutes, not days.
The AI-native layer
There is a version of this that is closer than most people think.
As AI agents begin taking on project-based work - writing code, producing content, running analysis, the payment infrastructure for those agents needs to look identical to the infrastructure for human contractors.
Petl's MCP server exposes payment primitives as callable tools for LLM clients. That means an AI agent working on a project can trigger invoice creation, route payment requests for approval, and settle payments, all potentially without a human managing each transaction manually. The agency of the near future will have human contractors, AI agents, and a payment infrastructure that treats both identically: work done, invoice generated, payment settled.
That’s the end state. The infrastructure to get there is being built right now.
FAQ
What is the best way to pay international contractors as a UK agency?
The most practical combination for most agencies is open banking for UK-based contractors, local rails for South African and EU contractors, and USDC stablecoin settlement for contributors who prefer it or where local rails are slow. Using a single platform that routes across all of these - rather than maintaining separate Wise, bank, and crypto accounts - dramatically reduces admin overhead.
How does IR35 affect agency contractor payments?
IR35 determines whether a contractor should be treated as an employee for tax purposes. For agencies paying contractors via their own limited companies on genuine project-based engagements, IR35 typically does not apply. However, compliance documentation is important. Petl structures contractor records and payment documentation to support correct IR35 assessment.
What is the difference between Petl and Deel for agency payments?
Deel is built for employment compliance - ensuring international hires are compliantly employed or engaged as EOR. Petl is built for project payment infrastructure - multi-party disbursements, invoice generation, compliance per jurisdiction, and reconciliation. For agencies paying contractors on project engagements rather than long-term employment contracts, Petl is the more appropriate tool.
Can Petl handle both GBP and ZAR payments?
Yes. Petl supports GBP via open banking, ZAR via local South African rails, EUR via EU open banking, and USDC stablecoin for any contributor globally. Rail selection is automatic based on the contractor's jurisdiction and payment preferences.
How does Petl integrate with Xero?
Every payment processed through Petl can be automatically reconciled in Xero - matched to the correct project, invoice, and cost category.
How long does it take to set up Petl for an agency?
Onboarding takes less than 5 minutes. Project and contractor setup is done through a guided flow. First payments can typically be processed on the same day, depending on whether the project team is leveraging Open Banking ot Stablecoin wallets.
Petl Pay is the ai-native payment infrastructure for project-based work. Built by an agency team, for agency teams. Sign up at petlpay.com.
