Growing use of independent contractors requires cutting-edge technology
The gig economy is growing and showing no signs of slowing down. According to ADP, one in every six enterprise workers is a gig worker. In many cases, the number is even higher: In about 40% of enterprises, one in four workers is a gig worker. Additionally, continued growth of the gig economy is expected as 71% of workers would like more flexibility as to when they work and the option of remote work vs. traditional environments.
Contractor management hindered by manual processes
The challenge many businesses face as they continue investing in non-traditional labor is lack of visibility into their independent contractor workforce. Managing hundreds, in some cases thousands, of independent contractors (freelancers, 1099 workers) is time consuming for most businesses, which simply don’t have the processes or technology in place to properly manage this talent.
In many cases, organizations take a hands-off approach, leaving the process largely up to managed service providers (MSPs), line of business owners and hiring managers. Others rely on dated strategies — disparate systems, spreadsheets and phone calls — to find and manage their contractor workforce. Traditional HR and human capital management (HCM) platforms are typically not designed to manage the nuance and complexity of gig work. Conversely, vendor management systems (VMS) are mainly used to manage the procurement and sourcing of talent through third-party staffing firms.
Simply put, businesses need to become more proactive and engaged when it comes to managing the growing legion of independent contractors in their agile workforce. With an independent contractor management system, they're able to do just that.
Definition of independent contractor management system
An independent contractor management system is a cloud-based workforce solution that empowers businesses to manage everything from onboarding and verification to talent organization, payment processing and management of work assignments, all via an end-to-end platform. The platform also arms HR and business executives with a powerful analytics engine to better track, manage and understand their worker costs.
Capabilities of an independent contractor management system include the ability to:
Onboard quickly to meet client demand
Validate information like completed drug screening and background checks
Verify information like bank accounts and U.S. tax IDs
View and sort workers by credentials, profile and work history
Group talent based on criteria set by the business (e.g., licenses, geography and more)
Collect documentation like W-9s, NDAs, and contractor agreements
With an independent contractor management system like WorkMarket, businesses can easily onboard and organize their existing independent contractors into groups called Labor Clouds. Criteria include certifications, location, skillsets, satisfaction ratings and more. By building pools of their pre-vetted talent, businesses can deploy workers faster to meet SLAs.
Manage assignments at scale
Are you still using manual spreadsheets to track projects and deliverables? Do you have an easy way to view all assignments and know which ones need your attention? When it comes to managing work assignments, an independent contractor management system empowers you to scale across large volumes of work. Benefits include:
Easily route assignments to individuals or groups of workers
Leverage assignment templates for recurring work
Centrally track all projects and identify any red flags
Collaborate with cont
ractors in real-time, with a mobile app to facilitate on-site work deliverables
Approve and initiate automated invoice processing and payments
Additionally, platforms like WorkMarket can easily integrate with your existing systems using an open API, allowing you the flexibility to create workflows that meet your business needs.
Automate payment processes
Using an independent contractor management system also includes payment processing capabilities that virtually eliminate tedious manual tasks and siloed systems. Payment highlights include:
API integration with third-party processors
Automated invoice generation on behalf of the worker
Invoice audit trail
Hourly billing or flat-rate billing
Payment options for workers including ACH, pay card, or electronic payment services
Visibility into spend across contractors or projects
1099-NEC furnishing and filing with the IRS and applicable state agencies
Flexible system to meet your business needs
Independent contractor management systems generally allow you to customize workflows based on your needs. Implementing and customizing these rules will help to both efficiently route jobs to the right workers and help ensure that every aspect of an assignment aligns with the expectations of both the organization and worker. Rules can be set around a number of variables such as:
Calculating custom payments and commissions using third party data
Setting a parameter for the work to be routed (e.g.: if a work order is not fulfilled, expand worker location radius by X-amount of miles)
Automated assignment routing based on scheduled timeframes, to individuals or groups of workers
Uploading assignment deliverables to another system
Businesses can also set rules through the platform to help reduce the likelihood of misclassifying workers. Some examples include:
Number of assignments contractor can complete
Amounts paid to a specific worker
Number of hours contractor can work per week
Percentage of total work from one person
Benefits of an independent contractor management system
The benefits of an independent contractor management system are numerous, thanks to automation that accelerates onboarding, verification and payment. By consolidating independent workers onto a platform providing one single source of truth, you can:
Retain top-tier talent through easy onboarding and timely payments
Engage contractors quickly to meet customer demand
Scale your business fast without added administrative burden
Improve compliance by leveraging automated guardrails that help you meet your business requirements
Gain real-time visibility on contractor spend and usage
Reduce cost and drive productivity through automation
An independent contractor management system facilitates proper reporting to tax authorities by automatically generating auditable paper trails. Policies can be implemented uniformly while “rogue spend” — those costs outside of the guidelines of an organization’s independent contractor program — can be analyzed and optimized.
With global businesses spending millions on non-traditional talent, companies can no longer afford not to have a system in place to manage and measure this incredibly important and rapidly growing segment of the workforce. By arming businesses with the systems, processes, and data to manage on-demand labor at scale, the independent contractor management system evolution is helping power the future of work.
Realize the full potential of independent contracting today. Get in touch with sales.