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Freelancer Management Software: How It Can Help You Grow Your Business

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Most modern businesses rely on an on-demand workforce, in addition to salaried employees. Freelancers and contractors can improve business agility, making it easier to adapt to changing customer requirements, can improve operational efficiency and reduce costs.

However, as your freelance workforce grows, you will find traditional HR and financial systems are not effective at managing them. Freelancer management software can help you manage all aspects of an on-demand workforce, from sourcing, through to onboarding, contracts, work monitoring, and payments.

What is Freelancer Management Software?

Freelancer management systems help organizations manage and scale freelancers and contract workers. They manage all aspects of the relationship between individual freelancers and the companies that employ them, including:

  • Onboarding and contracts

  • Project management

  • Contractor payments

A key function of freelancer management software is to gain visibility over contractors and their assigned tasks, allowing businesses to effectively monitor projects outsourced to freelancers. Freelance management systems can also simplify and automate the process of paying freelancers for completed work.

Another option for finding and managing freelancers is a freelancer marketplace. A freelancer marketplace is an online arena where employers can search for freelancers, and freelancers search for available contract jobs. Many of these marketplaces not only help companies find freelancers, but can also provide much of the functionality of a freelancer management system—including onboarding and contracts, task reporting, and payments.

Why are Freelancer Management Systems Important?

Freelancer management software provides companies with the processes and data they need to scale their on-demand workforce. Larger companies might have hundreds or thousands of independent contractors, and even as a smaller business, you might find yourself working with 10, 20, or 100 freelancers over time, which will be difficult to manage manually.

Freelancer management tools help attract top talent for available freelancer positions, reduce risk in contract projects, plan for future workforce needs, and manage labor costs.

Organizations have traditionally used a variety of tools, networks, and services to manage their external workforce, including spreadsheets, task boards, project management software, third-party payment systems, and HR solutions.

However, as on-demand workers become a large proportion of the workforce, these systems are no longer effective. Contracts with independent contractors are often one-time engagements, or are billed based on project deliverables, making them incompatible with traditional HR systems. A dedicated freelancer management solution provides consolidated reporting, centralized policies for contract workers, and payment management.

Freelancer management software not only provides tools to manage freelance workers—they provide senior management with a way to manage and measure this critical, fast-growing workforce sector, and make sure it is providing more value for the business. Read this in-depth blog post to learn more about the benefits of freelancer management software for growing businesses.

Key Features of Freelance Management Systems

Sourcing New Talent

Sourcing involves finding and qualifying freelancers for your company’s projects. There are many ways to find a suitable freelancer. At present, many of these methods are time consuming and lack quality assurance.

In a freelancer management system, the hiring process looks for matching options based on the company's professional requirements and availability. Some freelancer management systems provide a large database of freelancers with detailed information about their qualifications and experience. The quality of this freelance database will determine how quickly and effectively the company can find suitable candidates.

Pool Management

Another approach to sourcing freelancers is known as “pool management”. This assumes the company already has a large number of freelancers it is currently working with or were approved for work in the past. Traditionally, this information was saved in spreadsheets, and was typically inconsistent and incomplete.

Some freelancer management systems provide a freelancer pool management module, which allows managers and owners to search for freelancers in their existing pool based on skill, availability, rate, location, and custom tags. Team members can leave comments about freelancers they've worked with. Because these reviews are from trusted colleague, they carry more weight than reviews in freelancer marketplaces.

The biggest advantage of a freelancer pool is that workers in the pool have gone through onboarding already (see below) and it is very easy to start working with them again.


After sourcing new candidates, the company needs to add them to its on-demand workforce. This might involve several steps including:

  • Background checks

  • Obtaining contractor personal and payment details

  • Automatically generating a contract and obtaining a signature from the contractor

  • Granting access to IT systems and tools the contractor needs for their work

  • Generating a first invoice and initiating payment

Automated Payments

The more freelancers a company has, the more complex it is to manage them, and the more invoices the company needs to issue. A freelancer management system can track the work schedules of independent contractors, consolidate invoices, and generate a summary at the end of the month.

The system pays each freelancer individually for each agreed milestone, automating the entire process. This avoids the tedious task of reviewing and approving freelancer invoices, and eliminates human errors affecting payment for completed work.

Compliance and Documentation

A freelancer management system stores all forms and documents submitted by freelancers in one place. This prevents data from confusing different inbox and chat applications, and strengthens your organization's process for complying with compliance protocols. If you later need to get specific forms or tax details for a specific freelancer, you know exactly where that information is.

How to Implement a FMS

If you are planning to implement a freelancer management system in your organization, here are a few steps you can take to implement it effectively.

1. Define your Onboarding Requirements for Freelancers

Different companies have different requirements for managing freelancers. Define your onboarding process: do you require background checks, nondisclosure agreements, what types of contracts do freelancers need to sign, and whether freelancers need professional liability insurance.

2. Identify Freelancer Types

Most companies work with different categories of freelancers and manage different information for each category. To effectively implement a freelancer management system, identify the types of freelancers that will be managed by the platform. Most commonly, you will categorize freelancers by field of specialization and location.

3. Define a Payment Plan for Your Freelancers

Prior to the introduction of a freelancer management system, freelance payments are typically handled manually by the accounting department. The platform will allow you to standardize how and when freelancers get paid. You can define rules that specify:

  • What is the condition for freelancer payment

  • What are the payment terms (this can differ depending on the contract)

  • What are the payment methods supported (for example, wire transfer, credit card, or digital payments)

4. Define Necessary Integrations

A freelancer management solution needs to integrate into the company’s existing systems. Typically, you will need to integrate with systems like:

  • An e-signature tool to allow signing of contracts by freelancers and company officials

  • Project management and collaboration tools

  • Financial systems such as banking and payment applications


In this article, I explained the basics of freelancer management software and covered five key capabilities that can help you grow your on-demand workforce:

  • Sourcing new talent - providing a database of freelancers that can help you identify relevant professionals and engage with them.

  • Pool management - managing freelancers your organization has previously engaged with and making it easier to source them for new projects.

  • Onboarding - automating the process whereby freelancers sign a contract with your company, are set up for payment, and receive the required system access.

  • Automated payments - ensuring contractors get paid on time with no need for tedious and error prone manual processes.

  • Compliance and documentation - generating the required documentation for all freelancer activities, reducing legal exposure and ensuring tax compliance.

I hope this will be useful as you leverage the exciting benefits of the on-demand economy.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes

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