What are the differences between a Freelancer Management System and a Freelancer Marketplace?
Share this
2 November 2017 / freelance management

What are the differences between a Freelancer Management System and a Freelancer Marketplace?

As the freelance economy started to take off, a crop of online tools emerged to help employers find freelancers (and vice versa) and manage them. The number of U.S. freelancers surpassed 55 million in 2016 and freelancers now make up 35% of the U.S. workforce. Businesses of all sizes are increasingly relying on freelancers for copywriting, photography, video production, graphic design, software development and more. These workers have a ton to offer in terms of affordability, flexibility, and efficiency, but they can also put a strain on employers that don’t have the right processes and systems in place.

This new landscape of tens of millions of people with a distinct set of management and operational requirements can get overwhelming, which is why companies are increasingly relying on freelancer marketplaces and freelance management systems (FMS) to navigate it. However, for anyone new-ish to the scene, the differences between these two types of services may seem confusing. Fortunately, we’re here to untangle it for you.

Freelancer Marketplace
Trading Floor
A freelancer marketplace is an online platform where freelancers find employers and employers find freelancers. The challenge of the freelance economy is that it’s so fragmented. Freelancers are, by definition, individuals, and before freelance marketplaces, there was no centralized place to find them. Most relationships were built through word-of-mouth and referrals, through advertising, or through agencies, but none of these methods was ideal. Just because a freelancer worked well for one job doesn’t mean they will be appropriate for another and a random person responding to an ad requires vetting.

Freelance marketplaces enable freelancers to create profiles with all the relevant information—skills, location, availability, rate—as well as work experience and reviews of their work. On the other side, employers can post job listings with exactly what they are looking for. Then each can find each other. Freelancers can throw their name into the ring for jobs and employers can search for a roster of freelancers that fit their needs. One side has a service to offer, the other side needs a service, and boom, a match is made. Freelance marketplaces make it more efficient for freelancers to find work and employers to hire for work. It also expands the reach of both. A copywriter based in Mexico City can easily apply for a job with a company in London. A company in San Francisco can hire a web developer in Poland.

The largest freelance marketplace out there is Upwork, which was formed when the two largest platforms—Elance and oDesk—merged. Today, the company says it has twelve million registered freelancers, five million registered clients, and three million jobs are posted annually. The freelancers encompass 3,500 skills and earn more than $1 billion on the site each year.

Freelance Management System
Kalo Index

Once employers find freelancers, the next task is to manage them. Freelancers have to be onboarded, communicated with, and paid. This is where Freelance Management Systems (also sometimes referred to as Freelance Management Platforms) come in. Before these systems, freelance management was largely done using spreadsheets and a cobbled together array of systems. The more freelancers came on board, the more unwieldy and inefficient this approach became.

Take onboarding. To get to work, a freelancer needs to sign a contract, be given an assignment with all the particulars, and provided with any relevant tools. If HR is responsible for the contracts that never get sent and then a team manager is in charge of setting that freelancer up in Slack, there are many opportunities for delay and for logistics to slip through the cracks.

Check out our blog post - Why It’s Important to Pay Freelancers On-Time (and How to Do It).

On the payment side, not getting paid in a timely manner (or at all) is the most common freelance complaint there is. There are reports of news organizations (ahem Vice and Newsweek) that have taken up to a year to pay freelancers. Part of the problem is that there are so many different people and systems who have to get involved—assigning editors, managing editors, HR, accounting, etc.

These are the problems that Freelance Management Systems like Kalo solve. We put the entire freelancer lifecycle from end-to-end, onboarding-to-payment, in one place, automating and streamlining steps throughout. The system can automatically generate and store contracts and ensure freelancers have the tools and information they need to get started. It can also track progress, enable communication, and by automating steps of the invoicing process, ensure payment goes through quickly.

Furthermore, Freelance Management Systems can help companies find the right freelancer for the right job by logging information about what freelancer has worked with what team and what the experience was like. Reviews facilitate the hiring process and help companies to build long-term relationships with their favorite freelancers.

Both types of tools are valuable in today’s freelance economy. As more companies build a “blended” workforce, a blend of full-time and freelance, freelance marketplaces and freelance management platforms will play an important role in helping companies unlock the full potential of their freelance workers.

New to Freelance Management or still navigating the details and capabilities? We put together a page to help you learn more - What Is a Freelance Management System?



Peter Johnston

Peter Johnston

Founder & CEO @ Kalo

Read More

Freelancer onboarding, management and payments made easy with Kalo.

Find out more
Kalo Platform