Understand the company cost of managing freelancers and the financial benefits of delegating your admin work to an automated third-party system.
Freelancer Economy is Growing
The freelancer economy is changing the workforce worldwide as well as how companies are managing their business. According to Peter Miscovich, Managing Director at Strategy and Innovation at JLL Consulting in New York, by 2020 gig workers will comprise half the workforce and as much as 80% by 2030.
The Association of Independent Professionals and the Self-Employed (IPSE) states that freelance growth has outpaced overall employment growth in the United Kingdom, France and the Netherlands. The number of freelancers in the European Union doubled between 2000 and 2014, making them the fastest growing group in the EU labour market. Upwork and The Freelancers Union predict that 80% of the workforce will be freelance by 2027 and that the majority of millennials have chosen a career path in this direction.
Freelance Management Service
With freelancers becoming an increasingly important source of skilled workers for specific projects, many businesses are now tapping into what is a very cost-effective resource. As we shall see in this article, there are many positive financial benefits to managing and automating paperwork and compliant practice for your business with freelancers – as long as it is done correctly. This is where Flime’s freelance management systems (FMS) come in.
Managing your contingent workforce to adapt to move into freelancer management is a complex task, and many large and small corporations are left with inefficient practices that waste money. With the help of a service such as Flime, businesses can count on our expertise in onboarding, expense reports, tax reports, GDPR and PSD2. In addition, the innovative technology used to handle the tasks is always growing, changing and updating. Companies will be surprised when they learn how much money is actually needed to stay up to date and in turn, how much can be saved.
Companies may not realise how much paperwork costs. Handling paper forms can be expensive, cumbersome, and prone to errors. That is why electronic forms and putting them together in electronic workflows that speed things up considerably while cutting down on errors can save them both time and money.
For example, let’s say you currently employ someone (at €12 per hour) to upload resumes into your HR system, which takes roughly an hour per month. Your yearly costs would be €144 for this task (€12 x 12 hours per year). Let’s assume that automation reduces that one hour per month down to 5 minutes, or one hour per year. That’s an immediate cost savings of €100+ euros for one task.
More complex and time-consuming tasks and processes – reporting, approval processes, sending notifications, and so on – could add up to thousands of euros saved over the course of the year. When you compare all of those costs against the monthly or annual cost of an automation tool, you can understand how an FMS can contribute to saving money.
Reduce Tedious Errors
Many organizations have lots of information in files that must be managed and transferred which can take up a lot of time done manually. This is particularly true when dealing with complex file-naming schemes or secure information. Automating this process can save money by performing multiple tasks at a time. For example, generating documents, encrypting and compressing them, and then transferring them with no human error or manual intervention. This can prevent delays and errors and can save time, allowing companies to be more profitable.
Automating processes can improve accuracy. By redeploying human capital to more profitable projects, revenues can be increased. According to recent research, U.S. workers spend up to 38 hours each year trying to find manual documents that have been misplaced. If a worker earns $20 per hour, automating document management can save a company $760 per employee each year.
When calculating the Return on investment (ROI) automation brings, we need to look at the basic formula. ROI is a ratio of net benefits to costs and is reported as a percentage:
- ROI = [(Monetary Gains – Cost of Implementation) / Cost of Implementation] x 100
Suppose after one year your company saves an extra $5,000 because of the $1,000 automation software you deployed. Your ROI would be:
- [(€5,000 – $1,000) / €1,000] x 100 = 4 x 100 = 400%
That would mean for every €1 you spent on the automation software, you realized a €4 return.
Increase Project Completion Rate
Freelancers accept work remotely. This gives them the freedom to complete the work when and how they want within an agreed deadline as discussed with the client. It is up to them to complete the work properly and in a timely manner in order to get more work from their client or at least, a good reference.
The faster the freelancer completes the project, the more time they have for more projects and in turn, the more money they can earn. Companies benefit in terms of ROI from hiring motivated freelancers that complete tasks quickly for a cheaper price than a normal employee who is demotivated, covered for insurances, sick leave and monthly salary payments by the company.
Reduce Cost Of Talent
There are many benefits that come with hiring full-time employees. They get trained, they get to know the company; the culture and the core business, and some employees grow into more senior roles. However, when you look at the differences in hiring a full-time employee compared to a freelancer quantitatively, the numbers reveal that hiring a freelancer short time is much more cost saving.
The Huffington Post explores and analyses the numbers when comparing both options for a project that will take one year to complete with the full-time employee costing 130,000.00 USD per annum and a freelancer costing 150.00 USD per hour. The author, Micheal S. Solomon, concludes that once employee taxes such as payroll tax, Medicare, social security, unemployment insurances, benefits, holiday benefits and overheads are added up - the cost of a freelancer is much cheaper. Plus, you save on office expenses like supplies, computers, and locating office space for them.
In addition, companies do not need to pay an agency mark up for finding talent in a freelancer market. With Flime, for example, you can invite a freelancer to join the platform straight away with no extra costs. This equates to an average savings of 20-30% per freelancer.
Manage Invoices and Reports With Flime
Flime’s reporting system allows companies to track exactly how much is being spent and on what. Having inconsistent freelance management that is divided across HR departments and managers can be difficult to control and monitor. Outsourcing your freelance management will bring a company-wide approach to the management and hiring of your freelancers while at the same time empowering your company to track exactly how much you are spending and on what.
Cash flows can also become a headache as you have to decide on how much to pay freelancers then allocate the money. There can be scenarios involving refunds and paybacks which can get difficult to manage. With Flime, companies add the funds they have decided to spend onto the platform directly and once they have approved the work handed in by the freelancer, they can send the money with just one-click.
Avoid Financial Risk with Flime
Many businesses are required by law to comply with regulations like GDPR and PSD2. IT staff can be pushed to the point of no return, especially if more than one regulation must be complied with. IT departments can use Flime’s application integration in order to help coordinate and present information to auditors, along with providing encryption in order to make processes compatible with security regulations and to safeguard data. Failure to comply with regulations can end up costing companies to the point of bankruptcy. Avoid the risk, and allow a third party to manage your security while you focus on your core work.
Every Penny Counts
Savings can be significant when you deploy automation software for a business, and return on investment can be rapid. Numbers, of course, will vary with each situation, but well thought-out automation is one of the smartest ways to increase productivity and lower costs. Flime’s great deals on payment, wire transfers, privacy, security, and reporting system will save your company money that it would instead be spent on employees that have been hired to do a different job. Allow your employees to do the work that motivates them and save money by investing in Flime’s freelance management service.