In recent years, there has been a significant rise in the number of companies employing a contingent workforce, as they strive to enhance workforce agility, outpace competitors in talent acquisition, and more effectively meet their workforce goals. However, a major challenge persists for many businesses: they lack insight into their spending on contingent workers.
Many businesses, especially those with smaller volumes of contingent workers, often lack the necessary management practices, technology, or processes to effectively capture and monitor all their contingent workforce expenditures.
In fact, according to a study by Ardent Partners, nearly 60 percent of contingent spending goes untracked in financial planning, forecasting, and budgeting in the average organization.
Why is this important, and how can your organization achieve full visibility and control over contingent workforce spending?
This article addresses all your questions, helping you develop a cost-effective contingent workforce management program.
Why do businesses lack visibility into contingent workforce spend?
You can’t manage what you can’t measure, right? That’s typically the case for the contingent workforce of a large number of businesses.
This typically isn’t an issue for large enterprise organizations which have the resources to hire either specialized internal teams or outsourced contingent workforce MSPs specifically designated to manage their contingent workforce program.
These large organizations have high contingent workforce volumes and high spend, making the investment into a highly-strategic management program incredibly cost-effective for the business.
For businesses with smaller contingent workforce volumes, it has often felt like there was no real ROI on investing in proper contingent workforce management. Instead, these companies manage their contingent workers on time-consuming manual spreadsheets.
But this results in a complete lack of visibility and control over contingent workers.
These spreadsheets are vulnerable to human error, they get saved in multiple locations across different departments leading to inaccurate figures, inefficient processes and rates that aren’t standardized, and they even get lost.
The result? Contingent workforce data is saved across a number of spreadsheets under the same name, with no one in the organization knowing which is the right document to use. Even worse, contingent workforce information is only saved through emails, and never even entered on the spreadsheet in the first place.
With no centralized place for contingent workforce data to be saved, businesses completely lack visibility into their contingent workforce spend.
Why not knowing your contingent workforce spend is a problem
When your business doesn’t have the technology and processes in place to gain visibility into contingent spend, then rogue spend will run through your business and impact your bottom line. Rogue spend is any contingent workforce spend that isn’t accounted for, or approved, within your contingent workforce management program.
When you aren’t accounting for spend, then your business has absolutely no visibility into how much you are spending on contingent workers and no way of measuring your contingent workforce performance.
This will prevent you from answering some key questions around contingent workforce spend that improve your program, including:
- Are you paying market rates for your contingent workers?
- Are your hiring managers paying staffing agencies the predetermined standardized rates?
- Are your rates consistent across your entire business?
- Are all of our contingent workers being classified correctly?
Using a vendor management system gives your business the visibility and control it needs
Are you looking for a better, and cost-effective, solution that gives your business complete visibility into contingent workforce spend so that you can make program changes that reduce costs and improve workforce quality?
That solution comes in the form of a vendor management system.
A vendor management system, also known as a VMS or VMS software, is a cloud-enabled software platform that centralized and automates the entire lifecycle of managing contingent workers and staffing agencies - from source to pay.
By consolidating all of the processes and data associated with contingent workforce management into one central location, businesses gain complete visibility into their contingent workforce spend and where program improvements can be made.
How Does a Vendor Management System enhance visibility into Contingent Workforce Spend?
A VMS enhances visibility into contingent workforce spending by centralizing data, automating processes, and offering real-time insights into costs, performance, and spending trends, ultimately facilitating better decision-making and budget management.
1 - Centralized Data and Reporting:
A VMS serves as a single source of truth for all contingent workforce information, including worker details, project assignments, time and expense tracking, and vendor performance data.
This centralized data supports comprehensive reporting and analysis, allowing you to track spending by project, vendor, skill type, and other relevant categories.
VMS enables the creation of dashboards and reports that provide a clear overview of contingent workforce costs and trends.
2 - Automated Processes and Reduced Errors:
A VMS streamlines processes such as requisition management, onboarding, time and expense tracking, and invoice processing, reducing manual effort and potential errors.
Automated workflows ensure accurate data capture and timely payments, enhancing efficiency and reducing administrative overhead.
3 - Real-Time Insights and Spend Optimization:
A VMS offers real-time visibility into contingent workforce costs, enabling you to identify potential cost-saving areas and optimize spending.
By tracking spending trends and analyzing vendor performance, you can make informed decisions about vendor selection, contract negotiations, and resource allocation.
A VMS can help you understand bill rates, pay rates, and margins, facilitating data-driven negotiations with vendors.
4 - Enhanced Compliance and Risk Management:
A VMS helps ensure compliance with labor laws and regulations by tracking worker information, contract terms, and payment schedules.
It also aids in risk management by providing visibility into vendor performance, compliance, and potential liabilities.
5 - Integration with HCM and Financial Systems:
A VMS can integrate with Human Capital Management (HCM) and financial systems, offering a comprehensive view of your entire workforce, including both employees and contingent workers.
This integration allows for seamless data sharing and reporting, improving accuracy and efficiency.
Getting Started with a Vendor Management System
Learn more about the Benefits of a Vendor Management System and what to look for when choosing the best VMS for your organization. Download our Free VMS Buyer's Guide here:
Take the Next Step with Conexis VMS
Conexis is an award-winning VMS tailored specifically for mid-market contingent workforce programs. Leveraging the latest technology, Conexis delivers the expertise, reliability and security of enterprise systems, while offering the flexibility, user friendliness and tailored service you require. Conexis delivers enterprise level software - without the enterprise level complexity and cost.
Learn more about our Company and why organizations Choose Conexis VMS.
Contact Us
Whether you are looking to change your VMS solution, or just getting started, we are here to help. Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights). See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour, or Book a Personal Demo Today!
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