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What is Contractor Management: It’s More Than Just Payroll!

Contractor Management
Industry Resources & Trends
CXC Global5 min read
CXC GlobalApril 11, 2023
CXC Global

Contractor management is a must-have professional service for organisations with contingent workers in their ranks. Plain and simple.

With the ongoing rise of contingent workers in today’s post-COVID workforce, we’re fielding a lot of questions from corporations of all sizes about the best way to manage these workers. Additionally, companies are interested in what it takes to manage them in a way that is both compliant and that allows the organisation to realise greatest return on their talent investment.

For the uninitiated, these questions are typically accompanied by the enquiry: isn’t that just a payroll service?

No it’s not.

Today, I’ve provided a reference guide so you can better identify the different levels of contractor management and care available from service providers today. My aim is to ensure your company gets the best fit contractor management service for your workforce needs.

Whether you have a handful of contingent workers at any one time, or you fluctuate from a few to a few hundred, finding the right service for your business is crucial. Why? Because the right provider will enable you to optimise this component of your workforce.

Some organisations operate under a simplistic structure and manage only a few contingent workers from time to time. These companies typically require a low-touch service option, such as a simple payroll provider. Others operate in more complex scenarios, where multiple locations, worker types and remuneration structures are in place. This is where the greater risk can be present if a strategic contractor management system isn’t in place.

As you can see, it’s important to know the value of contractor management and payroll services in relation to the specific needs of your business. Being informed is the first priority, so you can make better contractor management decisions.

Let’s dive in…

Contractor Management: What is it?

Outsourced strategic contractor management involves:

  • Being the employer ‘of record’ for the non-employee talent in your business.
  • Strategic end-to-end engagement and management of contingent workers throughout the contract lifecycle.
  • Onboarding contingent workers: setting them up for success in their contract with your business.
  • Risk mitigation: covering all legislative, statutory requirements.
  • Streamlined governance framework, aligned to regulatory changes, future-proofing your contingent worker program.
  • Worker insurances.
  • Management of contingent worker health and safety.
  • Data driven management decisions: technology feeds reporting insights so your investment in contingent workers is optimised.
  • Consistent and reliable invoicing and payroll system.
  • Contingent worker benefits program: keeping them engaged through value-added incentives.
  • Offboarding contingent workers: ensuring all IP, company assets are protected. Also, providing a positive experience for the worker, especially if their re-engagement into your business is probable.
CXC Contractor Management Outsourcing Case Study

Contractor Management: Who is it for?

An outsourced professional service, that manages the contingent workers in your business. Suited to companies who may have one or all of the following factors at play:

  • Multiple sites, with multiple contingent worker types (for example, contractors, freelancers, Statement of Work, gig workers, casual workers).
  • Single site operation, with multiple contingent worker types.
  • Run numerous projects concurrently.
  • Run single projects, with multiple worker types.
  • Engage different categories of contingent workers (for example by skills, tenure, experience, remuneration).
  • Have contingent workers on different pay rates.
  • Have contingent workers from multiple sources.
  • In an industry highly susceptible to market fluctuations.
  • Engages workers in different times zones, countries, currencies.
  • In a market where contractor risk and compliance can be compromised or overlooked.

The logistical complexity of managing a multi-faceted contingent workforce, presents risks to the organisation. These risks include:

  • Statutory compliance.
  • Being across frequent legislative changes.
  • Ensuring workers are categorised, insured and remunerated correctly.

A strategic contractor management model, when delivered with customised insight, acts as a supporting function to your human resource department. This ensures a streamlined approach to workforce management regardless of talent source. And, it offers clear accountability for all stages of a contingent worker’s contract.

Now onto payroll services…

Payroll Services: What is it?

End-to-end payroll processing allows organisations to outsource the remuneration component of their contingent workforce management. By shifting this function from Accounts Payable to an external provider, the organisation can streamline and contain the process as a separate function. It therefore removes the need for additional staff to support payroll of contingent workers, as the service is typically modelled on a per-head basis. The key services involved in outsourced payroll include:

  • End-to-end processing of contingent worker payroll.
  • Technology function that interfaces directly with the payee and the organisation.
  • Payroll frequency as designated by the organisation.
  • Local tax and superannuation knowledge ensures the contingent workforce is paid accurately.
  • Single Touch Payroll services.
  • Simple payroll reporting on a frequency basis designated by the organisation.
  • Most commonly integrated via the cloud to the organisation’s HR and accounting systems.
CXC Global Payroll Management Case Study

Payroll Services: Who is it for?

Small to medium sized organisations who lack the people, processes or technology to manage contingent worker payroll.

  • Typically smaller organisations with a local operation (not international), who can achieve greater efficiency and cost-reduction from an external payroll provider.
  • Small to medium sized businesses who don’t have the resources or knowledge to ensure payroll compliance of their contingent workers.
  • Companies who inadvertently experience delays and errors in the payment of contingent workers.
  • Companies that undertake payroll of contingent workers in a manual format where inefficiencies and productivity is low.
  • Contractor reporting and payroll information is not easily accessible or is too simplistic. This makes analysis of the worker’s output and value difficult to assess.
  • There are off-cycle payments made regularly, due to errors in contingent worker payroll.

Payroll services are a highly valued adjunct to a high-functioning small to medium sized enterprise, lacking the resources, skills and know-how to effectively manage contractor payroll. For less complex organisations and situations, these services offer pay risk management and compliance, and are a great time and money saving service.

As one of the world’s top suppliers of contingent worker management solutions, CXC is perfectly positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across 5 continents, and with decades of experience, we can assist with every aspect of your program.

If you would like to find out more about how we can help with your contingent workforce solutionsplease contact us!

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About CXC

At CXC, we want to help you grow your business with flexible, contingent talent. But we also understand that managing a contingent workforce can be complicated, costly and time-consuming. Through our MSP solution, we can help you to fulfil all of your contingent hiring needs, including temp employees, independent contractors and SOW workers. And if your needs change? No problem. Our flexible solution is designed to scale up and down to match our clients’ requirements.

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