5 Tips to Properly Track Freelance Spend

Home/How-To, Productivity Hacks, Remote Work/5 Tips to Properly Track Freelance Spend

5 Tips to Properly Track Freelance Spend

As more agencies increase their freelance workforce knowing how to track freelance spend has become more difficult than ever. Different day rates and working patterns make freelance spending more unpredictable than salaries, and in the rush to finish a big project that spending can spiral out of control.

There are now more freelancers on the market than ever before. Estimates put the proportion of freelance workers in the UK at 15%, and over 30% in the USA, and more and more agencies are adapting how they work to take advantage of this new economy.

Upwork, the largest freelance marketplace, claims that half of the world’s most valuable brands (as featured on Interbrand’s Best Brands list) are regularly hiring freelancers through their platform. Estimates of the size of the “connected work marketplace” sector from professional services powerhouse PwC hit $10 billion in 2014, and its value is predicted to grow to $63 billion in the next five years.

The generational shift away from structured 9-to-5 work to fluid, demand driven marketplaces can already been seen in platforms like Uber and TaskRabbit. It’s not unreasonable to predict that in a decade the majority of workers for many organisations will be freelancers.

This shift poses a challenges to how companies work internally, however. With gig-based work comes gig-based pay, which by its very nature is irregular and less predictable than stable monthly paycheques.

Time and task management is also an issue – traditional employees can be taught how to complete a task and let loose on it ad infinitum. Freelancers require corralling into project-based teams and timeframes.

To take advantage of the agility, cost effectiveness and competitive edge provided by the freelance economy, the C-suite need to get to grips with these problems. The sooner they get on top of it, the sooner they can reap the benefits.

Know your team’s skills

It’s rare to find a freelancer with just one speciality – most have several strings to the bow, and so can contribute to projects other than those they were first hired for. Front-end developers can usually wrangle HTML, CSS, Javascripts and a handful of other languages. Freelance designers will often be a dab hand at user experience design. Freelance writers will normally have some coding and search optimisation knowledge.

Knowing the ins and outs of your team’s skillset means you can better staff up for a project, so it’s important whatever system you use can keep track of each freelancer’s skills. Knowing a database engineer can also handle some front-end work, or that a photographer is also a skilled videographer could mean you only need one freelancer instead of two or even three. The adage amongst engineers that the very best workers – 10xers – can get ten times as much work done as an average coder holds true in the freelance world. Finding that unicorn freelancer who can take the place of several individuals is the best way to keep your freelance spend down – and knowing the skills available to you is the first step.

Get the scope right

A freelancer’s worst nightmare is scope creep – when they think a project is done and dusted, but the client keeps coming back with tiny changes that eat up time but don’t generate any extra income.

Scope creep hurts clients too. Every round of changes means more delays, and the quality of the finished product always suffers if last-minute changes are rushed through to hit a deadline.

Scope creep is usually caused by requirements changing on the fly, and if those requirements end up being beyond the scope of the original project it can mean extra time, planning and another round of fees for the next batch of work.

The best way to make sure a project is wrapped to everyone’s satisfaction, maintain good freelancer-client relationship, and keep your budget in line, is to start each project with frank discussions about what the final deliverable looks like. Discuss with your freelance team how long they think delivery will take, and any risks that could result in a delayed or over-budget project.

Use an appropriate pricing structure

Freelance work is normally billed in one of two ways; on a per-item basis, or a set day rate. For example, if you hired a freelance team to build a website you could either pay a lump sum upon delivery, or an individual day rate to each freelancer until the job is done.

The nature of the work will normally dictate the pricing structure. Designing a print brochure or translating documents into another language are clear projects with finite endpoints, so a flat fee would be more appropriate.

If your team simply needs some extra capacity – a few more technical support staff to see you through a busy period, for example – a fixed day rate until the freelancer is no longer needed would work better.

Clients tend to prefer fixed pricing structures as there is less likelihood of overspend (as long as the project scope is accurate), while freelancers tend to prefer fixed day rates as they are protected from any overruns.

Track Freelance Spend

Once you have your scope and fee structure nailed down, some simple multiplication can give you your total freelance spend for any given project. Now comes the tricky part – making that budget stick.

Projects of all kinds, whether technical, creative or something else entirely, are dependent on the client, internal staff and freelancers working together in unison towards the same goal.

Communication is vital. Get regular progress updates from your freelancers and set check-in points and milestones. By monitoring everything and staying in contact with everyone involved, you can get any size project done and stay within your budget.

Get it all in one place

Figuring out skillsets, scope, pricing and tracking are a great starting point for hiring and effectively managing a team of freelancers. For agencies which regularly use freelancers, an end-to-end strategy is essential.

Download our free ebook below and learn how to make freelancers a powerful part of your agency’s talent.

By | 2017-05-06T11:05:03+00:00 May 6th, 2017|How-To, Productivity Hacks, Remote Work|0 Comments

About the Author:

Leave A Comment