This new agile workforce model is inherently fluid and presents unique challenges for finance leaders. Learn to manage the costs.
Companies are embracing the future of work and moving towards a blended workforce of employees and liquid workers. This new agile workforce model is inherently fluid and presents unique challenges for finance leaders. The challenges are similar to those with managing many vendors but are amplified by the work’s short-term, project-based nature. The number (and who) of freelancers engaged with your company in any given week will vary. How can you effectively manage the cost of the liquid workforce?
Contractor Spending Visibility
On average, 60% of contractor spending is unaccounted for in a company’s financial planning, forecasting, and budgeting. This type of expenditure often has fewer controls and systems in place. The odds are that spending on freelancers, contractors, independent consultants, and vendors is higher than you think. Lack of full visibility prevents finance leaders from providing accurate financial projections and analyses.
Using a freelance management system (FMS) like Liquid provides finance teams with full visibility to liquid workforce expenditures. This ensures that you can make accurate financial projections and effectively manage cash flow. Liquid’s dashboard makes it easy to keep track of invoices and payments.
Streamline and Automate Workflows
When we ask finance leaders about what pain points they are experiencing with freelancer and vendor management, one of the most significant issues is the time required to manage invoices and payments. As a company’s liquid workforce grows, manually managing the related financial processes rapidly becomes time-consuming and complicated. It can take many people hours each month to validate, approve, and authorize each payment.
On average, our clients were using 7 different systems to manage their freelancers and vendors before switching to Liquid. Fly by Jing now saves dozens of hours each month – time that can be refocused on growing the business, not on chasing paperwork.
Automating workflows not only saves time and money but can reduce compliance errors. With Liquid, you can establish different approver roles and approval workflows for your contracts, work orders, and invoices, ensuring the appropriate controls are in place.
As your liquid workforce grows, so too does the complexity of managing the related processes, including accounts payable. The short-term (often one-time) project-based work of freelancers and vendors results in many invoices, which increases the probability of errors.
With Liquid, invoices connect to work orders (WOs) or purchase orders (POs). This linkage makes it easy to verify the accuracy of invoices and make timely payments. Liquid’s automatic verification will flag discrepancies between invoices and WOs, such as hours exceeding the WO’s maximum. Automated verification minimizes errors, avoids duplicate payments, and saves you time and money.
Manage Compliance and Risk
Payment for your freelancers and contractors should be separate from your employee payment system. One of the first things CFOs do is split contractors from employees into different systems to derisk compliance issues, particularly if the company is based in NY or CA. Liquid has built-in features to help you with the behavioral, financial, and relationship control factors that determine compliance with independent contractor regulations, including California’s AB5 requirements. Separating employee and contractor processes and systems minimizes legal and liability risks for your company.
Meet US, State, and Local Requirements
Preparing tax filings can quickly become a massive headache if your accounting department has to chase after W-9 forms from your freelancers and vendors (or W-8 forms from international freelancers and vendors). The best practice is to have an automated onboarding process where these forms are collected upfront and securely stored before work begins – meeting compliance requirements and providing all the data that your accounting team needs. When tax time rolls around, all the data is already in hand to simplify sending 1099s.
Using a freelance and vendor management system like Liquid makes it easy for finance teams to control costs while their companies engage the liquid workforce. Liquid is a one-stop-shop for onboarding, communications, project and task assignments, SOWs, invoicing, payments, and much more.
Note, we are not providing legal, tax, or payroll advice. Please consult your legal, tax, and payroll professionals. These are simply to serve as guidelines based on our own experiences.