FMS vs. VMS - Why You Need Both
Lee Willoughby
Co-Founder & Owner at Bubty ??| Helping companies manage freelancers, globally! | Passionate to redefine "work" |
To say that the freelance market is thriving is an understatement. Worldwide, there are 1.56 billion freelancers . That’s almost half the workforce (46.5%). More specifically, in Europe, although statistics vary, there are approximately 32.3 million self-employed people in the EU.?
Interestingly, the European Labour Authority 2022 report on Labour Shortages and Surplus in Europe found that 28 occupations employing 14% of the EU workforce had skills shortages. These include the following industries:
Drilling down further into the issue, other research shows that European employers require the following specific skills:
Hiring freelancers could be the solution - a resolution that's snowballing in popularity. In fact, one survey of freelancers in France, Germany, and Spain found significant growth in the freelance market, partly due to the global pandemic and the increase in remote working. In the three countries surveyed, 53% of respondents had become freelancers less than four years ago. Interestingly, those surveyed cited regular communication as critical for a successful working relationship with a company (49%). In addition, 56% of freelancers believe that inflexible systems are the main barrier to working with larger businesses.?
Any agency, large or medium business, or in-house team tasked with managing freelance and remote workers needs the right software. This is imperative for laying the foundations for a smooth, productive, and fruitful working relationship. Freelance Management Systems (FMS) and/or Vendor Management Systems (VMS) are two such options.?
In this blog post, we'll look at each one, their differences, and why it could make sense to use both. There's lots to cover, so grab a cup of coffee and let's get straight into the meat and potatoes of this article:
What is a Freelance Management System??
A freelance management system is a cloud-based platform that helps businesses manage their freelance and flexible workforce.?
Typically, such software can be used to:
All in all, freelance management systems present a cost-effective and time-efficient way of managing remote and freelance workers that goes way beyond old-school methods such as Excel spreadsheets.?
What is a Vendor Management System??
Again, a vendor management system is typically a web or cloud-based software program.?
It's a platform that helps businesses procure temporary and permanent external services. It's especially beneficial for larger-scale enterprises that need a higher volume of contingent workers. For example, a company that frequently looks to recruitment agencies or headhunters to solve its hiring needs.?
Overall, a VMS is used by businesses to manage longer-term arrangements with third-party organizations. It can be fully integrated into existing workflows to successfully facilitate a business's long-term collaboration with external providers, be they recruitment agencies, marketing agencies, or other service providers.?
A Vendor Management System can also be used to:
Is a VMS enough to manage your flexible workforce??
Businesses that manage multiple individual freelancers and remote workers face different challenges than those working with external HR suppliers.?
Typically, a company may have much longer ongoing relationships with its external suppliers than it might have with individual freelancers. In contrast, where freelancers are concerned, a business might hire thousands of freelancers on a short-term basis for specific projects with a limited time frame. In addition, an organization may want to hire freelancers at short notice, often asking for an immediate start. Finally, it's also worth noting that this type of hire may be recurring but can also be a one-off too.?
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In light of everything we've just said, FMSs are explicitly built to accommodate such hiring practices. Their suite of tools facilitates fast hiring, onboarding, and compliance. This includes collating all the necessary information to legally hire a flexible workforce. For instance, a decent FMS will enable you to store completed background checks, NDAs, non-compete agreements, IP policies, and other signed contracts.
Conversely, a VMS supports the hiring process, including invoicing and timesheet management, but in a more limited way than an FMS can.
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Using an FMS: What Are The Advantages??
An FMS gives businesses access to tools that allow them to hire and onboard quickly, including filters to find people according to their rates, location, qualifications, skills, availability, and more. Freelancers can then be successfully matched with short and longer-term projects.
All freelancer data is stored centrally on the FMS (contact details, invoices, onboarding materials, including contracts) so that any department within your business can access that information.?
An FMS such as Bubty will integrate with existing tools to ensure that your FMS integrates seamlessly with your existing tech stack.?
Another broader advantage of using an FMS is that HR departments can gain an overarching view at any given time of which freelancers are working on which projects. Likewise, accounting teams also benefit because they can easily keep tabs on the costs of paying freelancers and set budgets accordingly.
But above all of that, companies can leverage their own curated talent pool of flex workers, without overspending on third parties. This is one of the main reasons companies start using an FMS. To build that internal talent pool, there must be benefits for the freelancers to sign-up for your company’s talent pool.
Using an FMS: What Are The Benefits For Freelancers?
As previously mentioned, freelancers prefer working closely with companies that are easy and convenient to work with. Needless to say, this extends to fostering effective communication and executing an efficient hiring and onboarding process.?
As we've already said, one of the great things about freelance management systems is that they can accept a company's invitation to join their ongoing talent pool. That way, if a suitable vacancy comes up, they're already part of the system, which makes for faster onboarding.?
Not least because you might have already got the administrative side out of the way and have their documents stored on your FMS. So if your freelancer has previously worked for you, there's no need to go through that rig morale again.?
While we're on the subject of paperwork, freelancers can easily access their contracts, policies, and agreements pertinent to their work. With everything kept in one place, time is saved, and there are fewer potential misunderstandings relating to pay rates, project parameters, etc.?
Similarly, you can store your freelancer's payment information to streamline the invoice payment process. You can also automate payouts to ensure freelancers receive timely payouts for their labor.
FMS and VMS - The Benefits of Using Both
It's important to note that using an FMS doesn't preclude a business from using a VMS in tandem. Indeed, using both platforms can offer several advantages.?
For example, suppose a business regularly works with a range of external companies and individual freelancers. In that case, it could be argued there's merit to using both cloud-based systems. However, both the FMS and VMS must meet the business's specific needs for this to work successfully.?
For instance:
By using both platforms, businesses can be more prepared to benefit from the growing freelance market while managing and maintaining their relationships with external suppliers.
Are You Ready to Start Using An FMS and/or VMS?
There are advantages to vendor management systems, just as there are advantages to freelance management systems. In addition, however, there are time-saving and organizational benefits to using both in tandem with each other - especially if you're running a larger enterprise.
Your VMS can support you in managing your external suppliers and tracking spending. In addition, your FMS can help you build and manage a freelance network, including streamlining all aspects of freelancing onboarding, collaboration, and invoice automation.?
If you’re interested in finding out more about using Bubty as a powerful freelancer management platform and ditching managing your freelancers via a spreadsheet, book a free demo today!