What is a freelancer management system?

A guide to Freelancer Management Systems

Freelancers are a great way to acquire skills for a specific project and present a business with a very cost-effective option for resourcing projects. But as the number of freelancers you engage increases, so does your need for a robust and flexible system for managing them.

In this guide:
  • Quick look summary
  • What does a Freelancer Management System (FMS) do?
  • FMS features
  • Benefits of using an FMS

Summary: What is a freelancer management system?

A freelancer management system is a central platform that enables an organisation to search and share a directory of available freelancers. Reporting and management information should allow hiring managers to control costs. An FMS should also facilitate project hiring, management and invoice payment.

What does a Freelancer Management System (FMS) do?

There are a number of reasons why a business would want to use a dedicated FMS to manage their freelance and contingent workforce.
  • Manage their freelance budget effectively
  • Ensure freelancers are onboarded correctly and consistently
  • Simplify paying freelancer invoices

Manage their freelance budget effectively
Without a central FMS, it is possible for a freelancer to enter an organisation anywhere. Freelancers can be hired through official HR channels just as easily as being hired directly by a line manager with a credit card.

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Having various routes into an organisation, and inconsistent methods of payment, it's possible for an organisation to quickly lose sight of its freelance spend.

An FMS creates a 'central point of truth' for freelancer engagement and therefore all spend and budgets. This is by far the most common reason an organisation chooses to implement an FMS.

With an FMS in place, better freelance resourcing decisions can be made because there is accurate management information available.

Ensure freelancers are onboarded correctly and consistently
Having standard, consistent, onboarding processes is crucial for an organisation. Every new employee should receive necessary H&S training, agree to security and non-disclosure protocols, and any other compliance step that ensures both employee and the organisation are safe and secure.

Without an FMS, a freelancer could create a risk. Because it's very easy for a line manager to engage a freelancer directly, it's possible for a freelancer to slip through an organisation's onboarding process. This creates potential security or IP risks. For example, without a system to provide checks and balances, a freelancer can easily be added to an email distribution list and not removed once their project ends.

An FMS will provide a consistent, correct onboarding process for every freelancer engaged by an organisation. For example:

  • Standard identity checking
  • Contract and NDAs
  • H&S questionnaire

Simplify paying freelancer invoices
Whilst every business has a method for an invoice, working with a large number of freelancers creates a scenario where there could be a large number of new invoices with very different terms, amounts and potentially currencies.

The volume of invoices can create uneconomic workload for finance teams. Especially if each freelancer needs to be created in an invoicing system as a 'new supplier' and go through new supplier checks or compliance.

An FMS provides an organisation a much simpler way to process the payment of freelancer invoices.

FMS features

Freelancer management systems, designed for larger organisations, typically come with the following features:

Searchable Directory with rich freelancer profiles
As a hiring manager in a large organisation that possibly engages thousands of freelancers, it is crucial to be able to search for a freelancer that meets your requirements.

Onboarding
Every organisation's onboarding process is slightly different. Your FMS should be able to provide an onboarding process that meets your requirements.

Project Hiring
It is important to note that whilst an FMS should provide basic project management functionality, it is not a replacement for a dedicated project management tool like, for example, Jira.

However, to be able to provide meaningful freelancer ratings and accurate management information, an FMS should be able to 'hang everything' off a project.

Messaging and file-sharing
Messaging and file-sharing once a freelancer has been hired is a given. But as a hiring manager in a large organisation, being able to message and exchange files with a freelancer before you hire them for a project is a time-efficient way to conduct preliminary interviewing or screening.

Ratings and reviews
Being able to see how your peers rate a freelancer helps de-risk making your first hire.

Talent Pools
Talent pools allow you to group and share similar freelancers. For example, you could create a talent pool for 'approved Java developers in London'. Being able to call upon a small cohort of pre-qualified freelancers for regular, repeat projects is a huge time-saver.

Invoice Payment
As mentioned, paying lots of new or one-off invoices can place an uneconomical burden on an organisation's finance team. An FMS can provide a simple, time-saving method of paying your freelancers.

Management Reporting
Spend vs Budget financial reporting is probably the most sought-after. But an FMS can provide a variety of detailed management reports, including:
  • Spend by department
  • Spend by project
  • Spend by hiring manager
  • IR35 and other regulatory risks
  • Quality (Rating reports)

3rd Party Integrations
As a large organisation, it's very likely you'll be running other enterprise software for example, CRM or ERP software. An FMS should have the capability to integrate with 3rd party applications, for example to share spend or budget data.

Benefits of using an FMS

There are a number of benefits of using an FMS instead of hacking something into a spreadsheet.

Better visibility
The first benefit is visibility. Visibility is much more than 'producing reports'. Visibility means no part of your freelancer engagement is unknown.

For example, you'll be able to see:
  • Departments using similar freelancers but paying different rates
  • Teams and projects overspending that might benefit from permanent headcount
  • Managers hiring new freelancers when there are underutilised freelancers already engaged

Better decision making
Improved visibility ultimately leads to improved decisions making. Being able to see patterns of spend and utilisation means a hiring manager will be able to make better decisions on how they resource their projects.

Tighter processes
The problem with most DIY or 'improvised' spreadsheet efforts to manage a freelance workforce is the systems lack process controls. A spreadsheet is designed to organise text and numbers and to run formulas and functions. It is not designed to manage, on-board or communicate with a team of hundreds of freelancers.

An FMS, with controls and features, designed specifically for working with freelance teams enables you to implement and manage much tighter control over your freelancer processes.

Useful resources

Understanding your Applicant Funnel

As extended, off-payroll talent becomes a more and more important part of an organisations total talent strategy, understanding the Applicant Funnel is key to ensuring you make the right resourcing decisions.

What is direct sourcing in recruitment?

Learn more about direct sourcing in recruitment and how to manage this workforce channel strategy.

Buyer's Guide: FMS Pricing Options

There are a number of factors to consider when assessing the right pricing model for your freelancer management system. Learn how to select the right one for your organisation with this guide.