Freelancing software that helps you get paid faster.
Differences between Freelance and Vendor Management Systems
When managing your contractors, should you be using a freelance management system or a vendor management system? The short answer is: it depends. First, let’s define what these two tools are. In many ways they appear to accomplish the same goals, but there are key differences you should consider when deciding what’s best for you.
According to TechTarget, a vendor management system is “an enterprise software platform that enables companies to control the process of procuring and managing a flexible workforce.”
Over at Entrepreneur, a freelance management system is defined as a “digital bridge” which helps “to simplify the way companies find, onboard, manage and pay their talent.”
Looking at those two definitions, it’s a little unclear what separates them. Essentially, both systems allow you to better interface with contracted workers. However, they’re designed to do this in different ways, and are optimized for different types of teams.
Features of a Vendor Management System
Vendor management systems have been around longer than freelance management systems. Therefore, it makes sense that their features tend to be designed for larger corporations. Although a VMS can manage individual freelancers, it’s better equipped for large volume situations. It’s good for connecting with staffing agencies and outside HR systems, which helps with setting up big teams and tracking a wide range of metrics.
Additionally, it has tools for managing inventory and supplies coming in from other companies. However, because vendor management systems are designed for this structure, they may be harder to customize. They may also lack some of the specific assets for managing teams of individual freelancers.
Features of a Freelance Management System
On the other hand, a freelance management system, as CrowdSource puts it, provides “a means for testing and training freelance talent, assessing individual performance and managing the assignment of work to freelancers.” The features of a Freelance Management System like Bonsai are specifically crafted for freelance talent management. So, while it may not be ideal for maintaining inventory of product, or tracking staffing agency data, it’s perfect for following the performance of individual contractors. You’ll find more robust project management tools, including channels for direct communication with your hired talent. In addition, freelance management systems tend to be easier to customize, with more integration options for your other tools and applications.
Usage of a Vendor Management System
The Society for Human Resource Management makes an interesting point about vendor management systems:
“Companies have long used vendor management systems to automate and manage the complexities of their contingent workforce programs, from hiring to onboarding to processing invoices. But as the definition of ‘contingent’ expands to more project-based work, and more organizations employ non-permanent workers overseas, the capabilities required from a VMS have changed.”
Vendor management systems have been useful for years because they work on a grand scale. Their strength lies in centralizing complex, high-volume workflows with ongoing supplies and processes. If you’re a startup, or if you’re managing a team of writers or designers, however, you may prefer something a little different to help you streamline your organization.
Usage of a Freelance Management System
A freelance management system speaks directly to the needs of freelancers and their managers. You’ll need to collaborate together on assignments, set up individual electronic payments, and analyze the spectrum of freelancer rates in your talent pool. Because an FMS is built for these tasks from day one, it’s better suited to connect your team in the most helpful ways possible. As time goes on, says Inc, “more and more software platforms will give startups the ability to manage freelancers.”
“More and more software platforms will give startups the ability to manage freelancers.”Inc
Since freelance management systems like Bonsai have risen alongside the gig economy, they’re strong contenders to fill this growing role.
Who Uses Vendor Management Systems versus Freelance Management Systems?
Within your company, a vendor management system will likely be relegated to your purchasing department, or key people in HR and management. Conversely, a freelance management system will be utilized by all these players and more. Project managers in your operations department will use the system to interact with freelance talent. Accounting personnel will come in to handle invoices and payments. On the contractor side, a VMS is utilized by vendors, suppliers, and staffing agencies. Your freelance management system, however, connects directly with your freelancers.
Find the System That Works for You
Ultimately, you need to choose the system that works best for you and for those you hire and manage. As noted by Aberdeen Essentials, “Your organization should implement technology that facilitates, not inhibits, your ability to change.”
“Your organization should implement technology that facilitates, not inhibits, your ability to change.”Aberdeen Essentials
Yes, a freelance management system like Bonsai is built for you to manage your contractors from the start, but it’s also nimble enough to shift with you over time. As the workplace changes, and your needs change with it, you want tools that can keep up.