In this context, another question may appear: how to pay your freelancer? This article will clear this up, so that your cooperation with freelancers runs smoothly.
Making sure the payment is legal – things to consider
If you are wondering about the best way to pay your freelancer, the first step should be preparing a contract. Once the agreement is signed by both parties, your respective interests are secured. The contract should outline the subject matter (namely, what the scope of work is), specifies the duration and nature of the cooperation, the expected remuneration, payment and settlement methods, etc.
When working with freelancers, clients usually use civil law contracts, such as: contracts for specific work, commission contracts, as well as B2B contracts. They can be drawn up either in a written or electronic form.
The best way to avoid any inaccuracies, delays and errors, is to pay extra attention to specifying in your contract in detail such important issues as settlement or payment methods.
Depending on the specifics of the project you are working on and your individual requirements (both yours and your freelancer’s), the payment conditions should be clearly defined, as they will determine the payment schedule.
How to pay your freelancer – options to choose from:
- Payment after the delivery and acceptance of the work/completion of project – paying the freelancer takes place after the ready work is handed over to the client and is accepted by them;
- By hourly rate – the total payment depends on the time spent by the freelancer on a given project;
- Payment in advance – both parties agree on a specific sum of money that is paid by the commissioner upfront. Once the project is complete, the client pays the rest of the amount specified in the contract;
- Stage payments – if the subject of the contract is a large and complex project, it is possible to pay your freelancer as you go, for example proportionally, after a certain stage of the project is completed and accepted.
Another important issue if you want to pay your freelancer is taking into account country-specific tax regulations – especially if you hire foreign freelancers. Each jurisdiction has different law and tax regulations and failing to comply by them might result in unpleasant consequences and financial fines, among others. Both employers and commissioners have to conform to the legislation of the country the freelancer works in. It is recommended to keep all documents related to hiring and cooperating with foreigners for at least a few years. They might come in handy if any doubts arise and you are asked to present them to tax authorities – they can help you resolve the case quickly.
While cooperating with international freelancers, pay attention to the currency you are obliged to pay their remuneration in. You should always convert the exchange rate of the currency in question on the day the payment is made and bear in mind the transaction fees, which make up a small percentage of the amount being paid.
What payment methods are there?
If you want to pay your freelancer, there are a few payment methods available on the market. These include:
- Bank transfer – it is one of the most common solutions, as it is secure and versatile. However, sometimes wire transfers incur additional costs, such as currency exchange fees or charges for not meeting certain transaction requirements. In order to make a bank transfer for the completed work, you need to obtain the BIC/SWIFT code and IBAN.
- PayPal – it is one of the most popular payment platforms, which allows to make online payments for products and services. Once the commissioner registers, they can connect their PayPal account to their bank account or credit card, which will enable the payment-making process. If you want to pay your freelancer, you simply need to enter the amount of money and the personal details of the freelancer, and they will receive the transfer in their PayPal account. If you are wondering about paying a foreigner, the PayPal platform automatically converts the money into their foreign currency. This solution guarantees a high safety level of your transactions, because the system is monitored with fraud-detecting tools. PayPal may however charge some additional transaction fees, which you should bear in mind.
- Payoneer – it is another platform dedicated to making international payments. Payoneer is a sort of a business account, designed especially for freelancers and small- or medium-sized enterprises. It allows you to make money transfers in various currencies, but it is worth noticing that the platform does not support accounts in Polish zloty and it may charge some fees depending on the type of transaction being made.
- Skrill – when researching how to pay your freelancer, Skrill might be a good option to consider. This service can be compared to a virtual wallet and its popularity is rising, especially because it offers payments with the use of cryptocurrencies. You can make international payments without providing your bank account details.
How to avoid fraud?
Deciding how to pay your freelancer is one thing, avoiding fraud is another. We should bear in mind that we are constantly exposed to risks, such as frauds or scams and it is no different with freelancers. How to protect oneself from these dishonest practices? One of the options is using the Escrow payments offered by Useme, a platform designed to facilitate billing between clients and freelancers.
How to pay your freelancer using Escrow?
Escrow is a type of a secure transaction, in which the payment for the work is first held securely in a deposit on the Useme.com account. Once the commissioner accepts an offer made by a freelancer, Useme prepares a contract and deals with all the formalities related to hiring this particular freelancer for the project. After the work is done and delivered, and the commissioner is satisfied with it and approves it in the system, the payment is transferred to the freelancer. If the freelancer drops out of the agreement or fails to deliver the agreed work, the money is returned to the client’s bank account, along with a correcting invoice.
To start settling deals with freelancers through Useme, all you have to do is request an invoice (related to the work you wish to account for) from them. Freelancers will start with filling a short form regarding the work that you are ordering. We take care of everything from signing a contract to sending the final invoice. After they finish the project, they’ll upload it to Useme. You’ll be able to download the ordered work along with a tax invoice.
How to pay your freelancer – summary
Issues related to payments are one of the most important aspects in cooperation between clients and freelancers. If you are researching ways to pay your freelancer, please remember to follow the legal regulations so as to avoid any future mishaps. It is also worth considering using some ready-to-use services available on the market, which will increase the security of your transactions.