Streamline Freelancer and Contractor Payments by Following These Six, Simple Rules
While the gig economy offers companies plentiful and talented pools of resources, paying those freelancers and contractors creates administrative and accounting headaches. The list is long.
Here are the most common:
- Invoices are delivered in varying formats such as email, paper, and online apps. They come to multiple people within your organization, depending on who “owns” that relationship and often are not sent to accounts payable until days after they arrive, throwing off terms related to payment timing.
- Relevant documents such as past invoices, contracts, and 1099s are distributed across multiple solutions – both software & paper – and can be hard to find if a question ever pops up.
- Invoices get “stuck” or lost in hard-to-track approval cycles. You waste precious time handling an onslaught of inquiries from freelancers checking on payment status.
You can take the chaos of gig economy payments and shape it into a manageable, transparent, and efficient process. Just follow these six, simple rules.
Rule #1: All invoices must be sent through an accounts payable solution.
Clearly outline the invoice submission process for freelancers and contractors. For example, “We will only accept invoices if they are sent in through our payment system. We will not accept paper or emailed invoices.”
Rule #2: Aim to make all payments digital payments.
Paper checks create complexities. Between cutting, signing, mailing, and reconciling them, it sucks up valuable time and resources. You can cut 50% off of the time spent on checks by moving to digital payments. A recent study showed that freelancers prefer digital payments over paper checks. Some even refuse to work with companies if they don’t pay online.
Rule #3: All payment documents must be stored in a centralized, accessible location.
In an office environment, essential payment documents like contracts, 1099s, and past invoices may be spread across multiple workstations, jammed into filing cabinets, or lurking underneath a stack of paper on someone’s desk.
Nix the frustrations of searching for documents by insisting all vital information for freelancers is stored in a centralized location. Take Bill.com for example. It provides document storage so that any information you need to review and approve a freelancer’s bill is only a click or two away.
Rule #4: The approval workflow process must be automated.
By instituting digital payments and centralized, online storage, you pave the way for the best part of modern payments: automation. Instead of forwarding emails or shuffling paper invoices, your bill payment system can shepherd that freelancer’s invoice from start to finish. Based on your company’s processes, it will ensure that all necessary stakeholders review an invoice, notifying each person in the process to do their part. It alerts users when it’s their turn to review and approve it, as well as reminds them when it’s taking too long. It alerts you when payment deadlines are approaching (no one wants late fees.) You can even set up automatic scheduled and recurring payments for trusted freelancers.
Rule #5: Encourage self-service.
Let digital payments systems do the heavy lifting for you. Freelancers can access the digital payments system to connect their bank accounts for quick, ACH payments. If you have questions about their invoice, a digital payment system enables you to communicate with them quickly and succinctly. You leave a comment attached to the invoice online and they respond. Freelancers will also get an automatic notification from the system when their payments have been sent.
Rule #6: Track everything.
Each step in the payment process must be tracked. Why? First, it promotes transparency. Authorized users in a digital payments system can log in and quickly find the status of payment (review, approved, pending, etc.). No guessing is necessary. Second, it makes your payments audit-ready. With the proper audit-level of access, your auditor can review payments from inception to completion – even down to images of cancelled checks.
Ready to streamline and organize your freelancer and contractor payments? Sign up for a risk-free trial of Bill.com.