Contractor Management 2 min

How to assess independent contractor management software

Written by Pedro Barros
July 8, 2024
Pedro Barros


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The post-pandemic boom in remote work has made freelance work and independent contracting way more popular in recent years. And it makes solid sense for businesses ‌to use this to their competitive advantage and tap into the global talent pool of workers to achieve their goals. 

If you’re already working with a small team of independent contractors, you may have figured out how to hire and pay them on time. But if you want to expand your team or plan to hire several contractors, across different countries, things can quickly get complex. 

You'll have to make sure you comply with local labor laws as well as those in the country where the contractor is based. You’ll also have to find a reliable system to make multiple payments in different currencies and handle processes around contracts, contractor onboarding, invoicing, and taxes.

If this sounds overwhelming, you can rely on a contractor management system to minimize the effort and make your life easier.

This article will explain the common issues faced by companies when hiring contractors and how contractor management software can resolve these. We’ll also explain the steps to take before choosing a contractor management solution and why Remote is the best option for you.

What are the challenges of managing independent contractors?

Before we begin assessing independent contractor solutions, let’s take a look at some of the common difficulties faced by companies while hiring contractors.

Worker classification

Most countries make a clear distinction between contractors and employees. In some countries, the status of a contractor changes automatically based on things like the longevity of the contract or whether the worker has only one employer. 

One of the primary challenges is correctly classifying workers as independent contractors rather than employees. This situation poses a risk to companies that do not review contractor classification regularly so much between countries. 

Generally, misclassification is determined based on who controls the behavior of the worker, the financial aspects of the work, and the terms of the relationship. Misclassification can lead to legal consequences, including penalties and back payment of taxes and benefits. Even globally reputed companies like Nike and Uber, have faced huge fines owing to their incorrect clarification of workers.

Developing compliant contracts 

Unfortunately, it’s impossible to use a universal contract for each country. Employers are solely responsible for having contracts that are legally recognized and compliant with local laws. This protects companies from legal action in the event there’s any kind of dispute with the contractor.

Compliance with local laws

Different laws apply to independent contractors compared to regular employees. Employers need to be aware of these differences in tax laws, insurance requirements, and labor laws to avoid legal issues.

If your team is spread across multiple countries, your ability to maintain compliance becomes that much harder. Labor laws change frequently, so you must commit to being in a constant state of learning to maintain compliance over time.

Processing invoices and paying contractors

Employers must be able to receive and pay invoices in a timely manner. Collecting invoices is the first step, and this becomes cumbersome when you work with multiple contractors. If you’re working with international contractors, you’ll need an efficient payment system to manage currency exchange and pay people in different countries.

Managing tax requirements

Managing tax requirements and processing the relevant tax forms is an ongoing challenge if you don’t have a trusted contractor payment system. It’s worth noting that no two countries share the same tax code, and many countries have a tax year that differs from the calendar year. Keeping track of withholding obligations and when to file and pay taxes across multiple countries is incredibly complicated.

Addressing these challenges requires well-drafted contracts, clear communication, and a good understanding of the legal distinctions between contractors and employees.

Read on to learn more about how using ‌independent contractor management software can be a crucial tool to provide peace of mind to entrepreneurs and small business owners while hiring contractors globally.

Why use an independent contractor management system?

A contractor management platform can make it quick, easy, and simple to handle the processes around hiring and paying global contractors. 

Partnering with a trusted contractor management software not only reduces costs and mitigates risks, but also makes contractor management a stress-free process.

With a contractor management service, you can:

View everything in one place. Storing your contractor information in multiple locations, such as spreadsheets, emails, or documents creates a lack of visibility in your team.

The absence of a single centralized view for managing contractor agreements, tracking invoices, payments, and more can lead to time-consuming and disorganized processes.

Access customizable contract templates to promote compliance. When hiring independent contractors abroad, using pre-configured contract templates can minimize your risk of violating local labor laws.

Misclassifying contractors — or not converting contractors to employees — can attract expensive fines and penalties in many countries, and in some cases, your authority to operate in the country can be revoked.

Simplify contractor payments. Contractor payment solutions provide cost-saving benefits by reducing sizable fees for bank transfers and currency conversions. You can automatically pay contractors in their local currency without worrying about exchange rates or manual currency conversions.

A contractor management service can simplify the process and give your team an easy way to submit invoices and an equally easy way for you to approve and pay them.

Save time and the hassle of doing it yourself. Investing in independent contractor management software gives you time to focus on growing your own business. You don’t have to immerse yourself in governance and compliance issues related to contractor payments or international contractor administration. 

link to The best freelance management systems to manage global freelancers

The best freelance management systems to manage global freelancers

Learn what a freelance management system is and does, and explore the pros and cons of the best FMSs.

How to choose a contractor management solution that works for your business?

Choosing the right contractor management and payroll solution is crucial for efficiently handling the complexities associated with managing independent contractors

Here are the steps you should take before making a decision:

Step 1: Assess your needs

Evaluate what specific needs your business has in terms of contractor management and payroll. Consider factors like the number of contractors you need to ‌use, the frequency of their work, the diversity of their locations, and any industry-specific requirements.

Step 2: Define your goals

Identify what you aim to achieve with a contractor management and payroll solution. Goals might include improving compliance, streamlining administrative processes, enhancing contractor satisfaction, or reducing costs.

Step 3: Research available solutions

Look into different contractor management and payroll solutions available in the market. Focus on those that cater to your industry and size of business. Check for reviews, testimonials, and case studies.

Step 4: Check for compliance features

Ensure that the solution you consider has strong compliance features, especially for tax laws and labor regulations in the jurisdictions where your contractors work. This is crucial to protecting your business against legal issues.

Step 5: Evaluate integration capabilities

Consider how well the solution can integrate with your existing systems (like HR software, accounting systems, and project management tools). Seamless integration can significantly reduce administrative burdens and errors.

Step 6: Consider user experience

Assess the ease of use of the solution for both your team and the contractors. A user-friendly interface can enhance efficiency and reduce training time and costs.

Step 7: Analyze cost vs. benefits Look at the pricing models of the solutions and compare them against the benefits they offer. Consider not only the direct costs but also potential savings in terms of time and reduced risk of penalties.

Step 8: Request demos and trials Before making a final decision, request demos to see the solutions in action. If possible, opt for a trial period to test the software in your business environment to ensure it meets your needs.

Step 9: Check for scalability Make sure that the solution can scale with your business as it grows. It should be able to handle an increasing number of contractors and adapt to changing business needs.

Step 10: Review support and service levels

Understand the level of customer support provided. Reliable support can be crucial in resolving issues quickly and minimizing downtime.

Why is Remote the best independent contractor and payroll solution?

Hiring global contractors is a significant step for any business. However, from setting up compliant contracts and efficient payment systems to compliance with local legislation and tax laws, there are complexities at every turn.

Businesses looking to efficiently manage and pay a diverse, global team of independent contractors can rely on a trusted contractor management system like Remote to make contractor management simple.

Did you know 60% of Remote customers find managing contractors easier compared to their previous solutions?

Remote offers: 

Global compliance. Remote’s team of employment experts excels in managing compliance with local labor laws and tax regulations across multiple countries. This is crucial for businesses employing international contractors, as it mitigates the risk of legal issues and penalties associated with non-compliance. With Remote’s Contractor Management Plus, companies can now proactively manage misclassification risks. 

Remote customers see a 47% reduction in contractor compliance costs 

A centralized, easy-to-use platform. The platform is designed to be user-friendly, allowing businesses to manage and pay their international workforce easily. This ease of use extends to both employers and contractors, making the processes smooth and efficient.

Quick and fast payouts. Did you know that 99% of international contractor payments on Remote are processed in less than three business days, and over 70% of those transactions are processed in less than 30 minutes? That’s how quick and simple it is. You get complete visibility into your payments, from the moment the contractor submits their invoice to when they receive their payment, eliminating manual invoicing and payment hassles.

Comprehensive suite of services. Remote offers a full suite of services that go beyond just contractor management services and payroll, including benefits management, tax document collection, and handling of legal paperwork. This comprehensive approach can be particularly beneficial for companies that do not have in-house expertise in these areas.

Advanced security measures. Given the sensitivity of handling payroll and personal data, Remote places a strong emphasis on security. The platform uses advanced encryption and security protocols to protect data, giving businesses peace of mind.

Easy scalability. Grow your business easily with Remote. Whether you’re looking to expand from 10 to 1,000 contractors, Remote can accommodate that growth without a drop in service quality. 

Transparent pricing. Remote provides clear, upfront pricing without hidden fees. This transparency helps businesses to plan their finances better and ensures there are no surprises. Our fair pricing guarantee ensures you are charged only for contractors who you’re actively working with.

Less admin, more impact: Remote’s smart onboarding and invoicing features including one-click approvals and bulk invoicing enable you to reduce busywork, leaving you to focus on the important stuff — like growing your business globally.

Download our Contractor Mastery Pack for an array of helpful resources to help you hire, onboard, and pay contractors at scale.

You can also begin a free trial of the Remote platform or speak to one of our experts today! 

Onboard, manage, and pay global contractors in one click

Sign up with Remote for locally compliant contract templates at just $29 per contractor per month, with no hidden fees.

link to How to manage independent contractors: an expert guide

How to manage independent contractors: an expert guide

Learn how to manage remote contractors at every stage — from hiring and onboarding to payment — with our in-depth guide.

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