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What is a FMS (Freelance Management Software)

Lee Willoughby
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What is a FMS (Freelance Management Software)

The future of the workforce is here

According to statistics, the revolution of the freelance workforce is only at the beginning of the transformation of the entire employee landscape. Yet the numbers and trends are leading for the impact of this revolution. This revolution creates new systems that take over the work landscape. One of those emerging systems is the freelance management system.

A Freelancer Management System is a software solution that helps companies streamline business processes for managing freelancers. Not to be confused with a freelance marketplace that focuses solely on talent search, but lacks multiple features to meet complex and operational business needs when it comes to freelance management.

There are currently 1.1 billion freelancers in the labor market. Freelancers are poised to become the majority of the job market by 2027.

We are still in the early stages of the freelance revolution, which means there is no archetype of freelance management software. Some companies let individual freelancers set up their own workflow, while others implement entire freelance teams within the company, including department manager.

4 key components
Despite many variations, all freelancer management softwares share 4 universal elements: Sourcing and Onboarding, Talent Pool Management, Team Organization and Payment. All functions of a freelance management system revolve around these key components. Let's take a closer look at them all.

1. Sourcing and Onboarding

Hiring a freelancer is a long, multi-stage funnel. It can be divided into

two halves: sourcing and onboarding.

At the top of the funnel is sourcing. It is about finding and qualifying freelancers and talents . There are many sourcing ways to find the right freelancer. For the time being, many of these methods are time-consuming and without quality guarantee. Within an FMS, the recruitment process looks at the matching options based on the skills and availability requirements of the company, whereby the freelancer and the company can contact each other within a portal. The quality of this database of freelancers determines the value and speed with which the right candidate can be found.

But finding the right talent only completes half the process. Before the freelancer can get started.

Getting a new freelancer up to speed is where the real profit is. Ideally, FMS could fully automate mind numbing and administrative matters. For example, as soon as a freelancer passes the background check, the system can automatically create a contract for him or her to sign, create Invoicing, initiate payment, email the IT manager so that internal tools can be granted access etc etc.

2. Freelance pool management

Sourcing and getting freelancers up to speed is a demanding process, but what if you don't have to do it from scratch every time? A major reason companies are embracing the freelance model is the flexibility it brings, as opposed to the long and costly recruiting process of traditional permanent employees. It wouldn't make sense if hiring a freelancer took just as much effort. That's why maintaining a database of freelancers ready to work is such an important aspect of any FMS.

Traditionally, this is done in spreadsheets. These not only require constant maintenance, the information is often not completely complete. An FMS eases the worry with built-in freelance pool management features, allowing managers and owners to search for freelancers based on skills, availability, rate, location, and custom tags from an entire pool of their own. Team members can leave reviews for freelancers they've worked with for reference to others on the team. You can trust these reviews more than those on public freelance marketplaces because they come from co-workers. Most importantly, you invest very little time in re-onboarding, as the freelancers have already gone through all the steps. In the long run, the larger the pool of freelancers, the more efficient it becomes to work with them.

3. Team organization
Working with freelancers is different from working with full-time employees.

First, companies hire freelancers to gain more specialization, knowledge and flexibility. On the other hand, this means that many freelancers will work remotely, on their own schedules, sometimes even in different time zones. Although it may not be a problem for companies, it is certainly a challenge for those who are used to only doing face-to-face. An FMS can solve this problem by providing basic collaboration features for a remote team, such as group chats, video calls, time tracking, or integrations with popular tools that are already in use.

Second, freelance projects often have a pre-agreed timeline, budget and deliverables specified in the worksheet, since the deliverables are usually directly linked to payments. This means that any change that occurs in a project can be communicated digitally directly in timelines and payments. It would traditionally be a hectic task to handle everything manually.

4. Automatic Payments
About 1 in 2 freelancers has experienced late payment at some point.

In most of these cases, customers have no bad intentions. They simply haven't arranged the internal processes properly. More often than not, freelancers don't even have the visibility and control over payment status, especially at large enterprises. Fortunately, an FMS can solve this problem by giving all parties the transparency they deserve.

An FMS streamlines the workflow of invoicing, approval, scheduling, payment and status updates at every step. All the designated team member has to do is click "pay" - and that's it!

With all payment information stored in a centralized system, organized by project, freelancer and department, you can easily track expenses and optimize budgets. Over time, the company becomes more cost-efficient in using freelancers.

We are entering the next phase of the freelance revolution. While it is still uncertain whether freelancers will actually spill over into the labor market as experts have predicted, the impact will be inevitable for teams, companies and even countries. Companies that haven't geared up for a scalable freelance strategy by 2021 will be able to lose themselves in massive business productivity. If your company still manages its freelancers from an excel sheet, then it is high time to look for a Freelance Management system.