Contractor Management Company: A Complete Guide

Today every business, one way or another, is international. Some have clients from across the world, and others hire freelancers and employees or even entire remote contractor teams from abroad. If you are among the latter, chances are, you will find yourself in need of a tool to simplify the contractor management process. This is where contractor management systems step in. In this article by EasyStaff you will find out more about the software and how it can streamline your contractor management processes.

What is a contractor management system?

Think of a cloud-based CRM for your freelancers. Simply put, it is a system that keeps track of all your independent contractors in terms of onboarding, payment schedule and documentation. Contractor management systems, also known as freelancer management systems, or FMS, allow companies to make payments to contractors not only transparent but also easily trackable. Clarity and transparency are essential for a company that wants to stay compliant across multiple jurisdictions.

The ultimate goal of any FMS is to ease the burden of admin in your workflow with the remote contractor teams. A well-grounded FMS has you covered at all stages, from sourcing to monitoring to compliant invoicing. If selected right and fine tuned, an FMS is able to reduce a lion’s share of otherwise manual work to just a few clicks.

How does a company know it is time they set up a contractor management system? The very nature of hiring foreign talents for short term calls for it. Traditional workforce management tools don’t account for remote-work-first needs of the company which must be able to pay abroad quickly and securely.

Contractor or freelancer management systems help streamline operations regarding outsource workforce which requires different workflows than with your inhouse local staff. Unlike regular staff, freelancers and one-off contractors need quick onboarding and payment processing. And that is where a reliable FMS comes in! It addresses these challenges that come up in freelance management:

• slow and complicated onboarding which would otherwise be fine in a context of regular employment
• standard time-consuming payment processes which don’t work for freelancers that tend to move quickly between projects
• unclear guidelines in tax compliance abroad is persistent in freelance management since more and more companies turn to other areas of the world for more affordable workforce

What to look for in an FMS?

The market of contractor management systems is booming now more than ever. The features discussed below are turning into must-haves in solutions on the market out there.

Contractor onboarding and offboarding

Efficient payroll operations that work fast and on demand are a powerful leverage when it comes to hunting talents in the international market. Likewise, offboarding should be simple and fast. This is especially true if you hire a freelancer for one-off projects. In essence, a good contractor management system should be easy to add contractors to and just as easy to let go of them.

Risk and compliance management

In procurement, especially if brought to an international level, risks are ever higher than in domestic contractor management. And there are numerous pitfalls that may cause the company to pay fees again and again. From worker misclassification to differing tax requirements, a reliable contractor management system must be able to have their clients covered in safety against any quicksand.

Reporting and Document Management

The reason you need to have all employment-related issues in order is that you need to be ready if documentation is requested by tax authorities. An efficient contractor management system has sufficient reporting functionality and is able to issue closing documents for any type of cooperation you engage in. It should also provide a digital signature solution for documents so if you and the contractor are out of snail-mail reach, you are still able to sign documents.

Choosing the right contractor management system

The decision should be informed and critically assessed. Once the company starts to scale, it is difficult to switch in media res, as more and more freelancers and contractors get to work with you. Here are some of the most relevant questions that will guide you through your search for your best contractor management system.

• How difficult is the onboarding process? Naturally, the party that requires convenience most is your team. Does it take an accountant to onboard a given contractor management system? How long and how difficult is the verification process? These questions will help you evaluate the convenience of a CMS in your company. Yet you should also assess a potential SaaS from the contractor’s standpoint. If a solution takes days on end to add a contractor and to start work with them, this may not be the most robust CMS. Freelancers simply won’t hang in there to wait for the project to finally begin.
• How is the reporting functionality? A contractor management system should provide reports, documents and invoices necessary for complaint work across nations. Documents should be easily retrievable upon request. Most importantly, they must be compliant with the international and local tax and work regulations.
• What is the level of compliance the platform offers? You can begin answering the question by finding out how many countries the system is compatible with. Your next step should be to find out what its closing documents look like. It is okay to request them from a representative to see for yourself.
• Can you integrate the solution into your existing selection of tools? Automatization of processes requires seamless integration among tools you use to operate your contractors and freelancers. A reliable CMS should be connectible via API or a custom code.
• What are the payment capabilities? Another important feature of a freelancer management system is its payment and withdrawal options. Is there a hold on funds, i.e. a pause before the freelancer can withdraw money? The period lets the client get their money back if the end result turns out wrong or incomplete. How can the freelancer withdraw funds on their end? Obviously, simply transferring the money is not enough. The recipient should be able to use it.

Contractor Management System in Action: EasyStaff 

Some contractor management systems are enterprise-focused, and some offer the bare minimum of functionality to SMBs. EasyStaff, the Feelaner management system, is the golden middle that provides the critical toolkit and scales with the client.

Contractor onboarding is fast and simple. The client creates a link for their freelancer. The information that the freelancer is required to provide includes name, contact details and address. Once the data is provided, they are asked to sign a service agreement. After that, the client and the freelancer can move on to the good part — getting things done.

Risk and compliance management is the priority for EasyStaff. For every payment the client makes, they receive 2 types of invoices and a service contract. This way any transaction is supplemented with the necessary closing documents to cover it for the tax authorities. EasyStaff, although not requiring excessive documents at the start, may request more documents later on if a transaction or a recipient seem suspicious. Thanks to its location — Vilnius, Lithuania — EasyStaff takes the risk off of the client. The service assumes the position of a contractor which helps the client escape a direct relationship with a physical person.

Reporting is easily accessible in the account. The company’s data and documentation are stored forever, and in case anything is lost, it can be retrieved through customer support. Clients can easily fall back on previous records to file for new payments. Documents are provided within minutes for any payment, and they are fully compliant across the world.

How does a company start to work with an FMS?

The onboarding procedure is different for every platform. Overall, the steps boil down to the following instruction.

• Fill in a registration form. At this point, the SaaS provider will need to learn more about your company and verify it. You are definitely going to be asked to provide IDs and other documents that prove your company is real.
• Set up your personal account. With EasyStaff, this step only takes a few minutes. In other platforms, you may have to deal with a number of filters and functions to fine tune your workspace.
• Onboard your freelancers. Invite them to join the platform and lead them through the registration. In EasyStaff, you can count on our client support to back up your freelancers.
• Once the freelancer is registered, and you have received all the details from them, you can top up your balance in the account. The money you load will be later used for paying the contractor.
• After the freelancer completes their work, you can move on to paying them. This where the SaaS normally charges users. In EasyStaff, you are given a 10% tariff which can be adjusted on request. It means that for every $100 paid, EasyStaff takes $10 for its services. The tariff selected influences the withdrawal methods. For example, at 10%, the contractor can withdraw money in any method available, and you as a company are able to top up your balance with bank cards.

Key Takeaways

• Contractor management systems, also known as freelancer management systems, are alternatives to traditional employee management tools. Unlike regular recruitment, work with remote freelancers implies speed, simple onboarding and frequent payments.
• Setting up a contractor management system and tailoring it for your company’s needs is an essential step in ensuring global compliance across jurisdictions.
• A reliable CMS supports multiple jurisdictions and provides documentation to support every payment. One example of a CMS that scales with your company is EasyStaff.
• Selecting a proper CMS provider before the business scales is important, as it becomes increasingly challenging to switch half way.