Discover the benefits of automating accounts payable and payments for freelancers and contractors.
Automating your company’s accounts payable (AP) and payment processes has many benefits. However, the financial operations related to freelancer engagements are often managed manually. As your freelancer and contractor workforce grows, the headaches and complications with manual oversight and financial management grow exponentially. Shifting to automated AP allows your company to take advantage of the liquid workforce while minimizing the impact on the accounting team.
Accounts Payable and Payments Challenges with Freelancers
When freelancer engagements are managed manually, many challenges can arise – including compliance issues. These challenges can increase risks and negatively impact the financial health of the company.
Financial Visibility and Cash Flow
Manual accounts payable and payments are two of the key reasons why 60% of contract spend can be unaccounted for within financial planning, forecasting, and budgeting for the average company. This lack of visibility can result in unpleasant surprises and cause cash flow issues, particularly for startups and smaller companies.
Time and Costs
For the finance team, the workload increases as more time are required to deal with manual data entry, invoice approvals, tracking down invoices, or hunting for payment information. This time could be spent instead on higher-impact financial tasks and projects for your company. Additionally, issues around vendor payments, such as lost invoices or late payments, can negatively impact the company’s reputation and ability to work with that vendor or freelancer again.
Errors and Fraud
These errors’ scope and scale can vary greatly but include incorrect payments, double payments, and missing payments. Additionally, it’s harder for potential fraud to be detected when manually matching invoices and work orders/contracts.
Audit Controls and Compliance
When working with freelancers and contractors, companies must file Form 1099 for each one that earned $600 or more during the year. However, to file these forms, the finance team must have all the required data, including all of the payment data and information from the freelancer’s W-9 Form. When freelancers and contractors are managed manually, this information can often be incomplete or missing, requiring the finance team to track it down. This also poses problems for any financial audits or audits related to worker classification.
Benefits of Automated Accounts Payable and Payments
Automating your accounts payable and payments for freelancer and contractor engagements solves these challenges for your finance team.
Transparency, Visibility, and Cash Flow
Migrating your freelancer and contractor management to an automated solution like Liquid makes it easy for the finance team and the hiring manager to see at a glance the current status and expected cost of all current contracts. The finance team has full visibility to all freelancer engagements, making it easier to accurately forecast financials and expected cash flow.
AP Cost Reduction and Operational Efficiency
Manually processing invoices can cost $10 to $30 per invoice. Using automated accounts payable reduces your AP costs by up to 50-85%. Plus, instead of spending time tracking down invoices and approvals, your AP team can spend that time on higher-impact tasks, analyses, and projects. Finance team processes, such as month-end / year-end closes and tax filing, also become faster and more efficient. Liquid user Jing Gao of Fly by Jing says she now saves dozens of hours every month.
With Liquid, you can set invoice approvers and approval policies and automate your company’s invoice approval workflow, significantly reducing the time involved. Automated workflows significantly streamline operations while also protecting your company by enforcing expenditure authority rules.
Improved Vendor Relations
Paying vendors on time and accurately is essential for good vendor relations. Switching from manual to automated payments avoids the relationship issues caused by missing, late, and incorrect payments. Liquid makes it easy to pay vendors in minutes, whether the freelancer is based in the US or abroad, with secure, 2-day payments to over 175 countries. You can schedule your payments based on the terms agreed with each vendor, such as net 30.
Automated verification of invoices makes it easy to avoid financial errors and to catch potential fraud. With Liquid, freelancer invoices are automatically compared to the associated work order. Any discrepancies, such as overbilling on the agreed hours, will be flagged for review. By tying invoices to work orders, an audit trail is created, enabling the accounts payable team to identify fraudulent and duplicate invoices.
Reduced Compliance Risk
To avoid potential compliance issues, it’s essential to ensure that your company has all the required documentation, such as W-9 forms, for every freelancer and contractor. With Liquid, all the required documents, invoices, and contracts are securely stored and organized for each freelancer. Everything you need can be quickly and easily accessed for any financial reviews or worker classification audits.
Liquid includes an automated onboarding workflow, ensuring that your defined process for engaging with contractors and freelancers is followed every time and saving you even more time. Joe Vezzani of LunarCRUSH says that he saves 95% of the time it used to take him to onboard new contractors before using Liquid.
Automate Freelancer and Contractor AP and Payments with Liquid
Liquid makes it easy to automate invoice reviews and payment approvals for your vendors while also helping your company meet federal and state compliance requirements. Plus, Liquid integrates with accounting software like QuickBooks, eliminating manual data entry and providing one integrated view of your company’s financials. And with Liquid’s low-cost transaction fees, you’ll start saving time and money right away.
Ready to automate your payments to freelancers, vendors, and suppliers? Try Liquid today.