The way skilled workers define work and how they choose to work has drastically changed over the last decade. The number of freelancers in the U.S alone has grown exponentially and is expected to represent 50.9% of the US workforce by 2027.
As the freelancer community and reliance on freelance services grows, businesses have been looking for a way to find, hire, onboard, pay, and manage freelancers in a smooth and efficient manner. This need is precisely why Freelance Management Systems were made.
A Freelance Management System (FMS) is an HR software that streamlines the way companies manage their freelancers, remote workers, independent contractors, and contingent workforce. An FMS handles complex HR needs, including but not limited to, recruiting, onboarding, compliance screening, self-billing, payroll, task management, and more.
Who Needs a Freelance Management System?
Every company that wants to bring automation to its HR functions needs a freelancer management system. Especially when companies are managing between 50 - 10,000 employees and freelancers, a formal management solution is needed to keep track of their entire workforce. Even if you have a payroll software in place, a freelance management system is still vital because the freelancer workforce is very different from full-time employees. A freelancer’s work is more assignment-based and payments are much more frequent, rendering traditional HRIS and payroll systems unfit to manage the contingent workforce.
How Does a Freelance Management System Work?
A freelance management system provides companies with a single dashboard from which they can manage and organize all of their freelancer-related details and activities. When you have complete control and visibility into your freelancer activity, you will spend less time worrying about tedious administrative tasks and more time on strategies that contribute to your bottom line. Here’s a breakdown of all the ways an FMS can support departments across your company:
- Hiring & onboarding freelancers
- Preparation and signing of contracts through e-signature
- Storage of all contracts and other relevant documents
- Talent pool access
- Project assignment
- Project progress monitoring
- Payroll management
- Tax forms storage
- Customized report generation
The Top 3 Features to Look for in a Freelance Management System
1. Sourcing and onboarding employees
An FMS helps businesses find the right freelance talent. Businesses can use an FMS to create job posts that are then shared on several platforms like job boards, internal talent pools, and more. Whenever a freelancer submits an application, the FMS will assess the candidate’s skills, then stores their details, as well as their availability for employers’ convenient reference.
Once the right talent is hired, the onboarding process starts. An FMS aids in this process by enabling contract signing, document gathering, worker status classification, payment method set-up, and providing freelancers with the necessary access credentials.
2. Talent vetting and management
An FMS hosts a comprehensive database of freelancers who have gone through all the necessary compliance steps and are ready to work. All a hiring manager has to do is simply log in and search this database for freelancers by skill set, availability, pay rate, location, and other criteria or custom tags. Certain FMS solutions also have AI-based talent matching that will automatically suggest candidates that suit the description of your job posts.
At one point or another, almost all freelancers have experienced the issue of late payments. The main reason behind late payments is poorly run internal processes and workflows.
An FMS ensures your freelancers are paid on time, as well as offers flexibility and transparency into the freelancer payment process, including invoicing, approvals, auto-payment scheduling, and reporting.
Implementing a Freelance Management System: What Should You Do Before Hiring Freelancers?
Before you start hiring freelancers, here are three things you should define in your FMS first:
1: Define your freelancer onboarding criteria
Every organization has different criteria for freelancers onboarding. This may include conducting background checks, reviewing performance reports or letters of recommendation, signing NDAs, etc. Decide what your onboarding process should involve and define it into your FMS before hiring freelancers.
2: Define your freelancer payment method and frequency
Without an FMS, companies usually pay their freelancers through the finance team. But with an FMS, one has the opportunity to standardize how, when, where to pay the freelancers. Payments can be at the end of each month, bi-monthly, or weekly, according to your convenience. An FMS also enables companies to hire freelancers from other countries and pay them in their respective currencies.
3: Define integrations between your FMS and other 3rd party tools
A freelance management system can easily integrate with your existing systems from e-signature tools like PandaDoc that ensures all freelancer contracts are signed, to collaboration platforms and messaging tools like Asana and Slack. Additional systems an FMS typically integrates with are:
- HR Systems: Workday, Bamboo HR, Transformify, Namely, Success Factors
- Project Management Software: Mavenlink, Asana, Wrike, Trello
- Cloud Storage: Dropbox, Google Drive, Box, PandaDoc
- ERP and Finance Systems: Quickbooks, Workday Financials, Sage, Xero
As businesses continue to work with more and more freelancers and contractual workers in their day-to-day tasks, a way to manage this talent and optimize onboarding and payments becomes extremely important. A freelance management system can automate all of those processes, saving you a great deal of time, effort as well as resources. So are you ready to make the leap and excel with your freelance workforce and remote teams?
Riddhi Dhadda is the Marketing Executive at Transformify.