Invoicing in complex contingent talent market: The role of Managed Service Providers (MSP)

Invoicing in complex contingent talent market: The role of Managed Service Providers (MSP)

The contingent talent market is growing rapidly, representing a significant portion of the modern workforce. Have you ever considered how your buying habits have influenced how contingent workforce companies operate? Nearly half, or 46%, of Managed Service Providers (MSPs) are changing how they do business due to shifting procurement habits.


Manohara Kasaiah, Global Operations Manager

These changes include an increased interest in providing integrated payrolling solutions for their MSP clients. Managing billing and invoicing in a complex talent environment presents unique challenges. Employers procuring their own payroll solutions often make costly mistakes, struggle with compliance issues, and fail to leverage all the benefits of MSP’s strategic and hassle-free invoice process designed to integrate with a Vendor Management System (VMS).

Common employer mistakes

Mistakes will likely happen when businesses try to set up the invoicing process themselves without know-how or experience. For example, project managers approve timesheets without understanding the criticality of timeliness or a lack of proper invoice procedures, including the absence of a VMS.

Sometimes, managers are not aware of the invoicing process and its importance, which leads to delays, inaccuracies, and other downstream impacts like:

  • Lack of standardisation: Managing invoices can become a logistical nightmare without a standardised process. Discrepancies in purchase orders concerning rates, payment terms, invoice formats and efforts can lead to confusion and errors.
  • Failure to automate: Manual processes are time-consuming and prone to mistakes. In today’s digital world, invoicing automation is vital to improving programme efficiency and accuracy.
  • Ignoring compliance red flags: Compliance with legal and tax requirements is crucial. Failure to do so can expose employers to co-employment risk, hefty fines, and damaged reputations.

Automation is a viable solution to streamline and simplify the contingent labour invoicing process. Employers should also be mindful of local labour laws and compliance regarding invoicing. By considering these factors, employers can avoid common mistakes and improve their invoicing procedures for all types of contract labour.

Avoiding common invoicing pitfalls

Partnering with an experienced Managed Service Provider (MSP) can help avoid potential business risks like co-employment when invoicing your contracted labour suppliers.

Co-employment is a substantial financial and legal risk. At Pontoon, we work with our clients to understand current payrolling policies for contingent labour. We assess exposure to co-employment risk and deploy corrective actions via third-party payroll providers.

Additionally, we can help set up direct billing arrangements and advise our clients to avoid direct payments and contracts between their contingent workforce whenever possible. Typically, we involve a staffing or payrolling company to establish a safeguard between parties.

Choosing a payroll provider

Providing your contingent workforce with clear and straightforward invoices is key. Organisations must consider the following variables when looking for a payroll provider:

  • Service delivery locations
  • Hiring volumes per country
  • Profit and loss structure (global/regional/local business unit)
  • Local legal requirements and restrictions
  • Withholding tax and other tax restrictions
  • Currency export restrictions
  • Implications of foreign exchange rate conversion

Configuring a Vendor Management System (VMS)

A VMS is a web-based application that allows businesses to manage and procure staffing services. It provides many invoicing benefits, including:

  • Streamlined processes: A VMS can automate and standardise invoicing, reducing errors and saving time.
  • Improved visibility: With a VMS, employers can track contingent labour spend and performance in real time, helping them make data-driven decisions.
  • Enhanced compliance: A VMS ensures adherence to legal and tax requirements, minimising non-compliance risk.

Are you wondering how to configure an error-free automated invoicing process? An experienced MSP provider like Pontoon can be instrumental in managing invoice values in the millions to billions. We can help set up invoicing procedures with multilayered control measures on timesheet approvals and validations/reprocessing of timesheets –a vital task that hiring managers often overlook. We act as trusted advisors to our clients at every stage to ensure successful implementations/configuration.

During the VMS implementation phase, we help define the requirements of automated invoice delivery mechanisms, develop efficient workflows, and provide the necessary documentation. This means that timesheets and approvals available through the VMS become the absolute basis for invoicing, ensuring a streamlined and error-free process.

Compliance and tax implications

Laws regarding invoicing and tax regulations across countries and geographies can be complex. An experienced MSP like Pontoon can support local-to-local entity consolidated billing for many countries across the world.

Compliance with legal and tax regulations is one of the biggest challenges in the contingent talent market. MSPs can help employers overcome these hurdles by:

  • Keeping abreast of regulations: MSPs stay updated with the latest laws and regulations changes, always ensuring compliance.
  • Managing risk: By ensuring compliance, MSPs help mitigate risks associated with non-compliance, such as fines and reputational damage.

Key takeaways

The complexities of invoicing in the contingent talent market can be daunting. However, these challenges can be effectively managed with the proper support from an MSP. MSPs not only help avoid common mistakes but also leverage the benefits of a VMS, focus on the contingent labour experience, and overcome compliance, legal, and tax challenges.

It’s time to step towards a more efficient and compliant future. Reach out to us today and easily navigate the complex world of contingent talent invoicing. Don’t let the complexities hold you back from reaping the benefits of the contingent workforce. Embrace the change and let an experienced talent provider like Pontoon guide you.

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