Working with freelancers is a great way to outsource labor at an affordable price. The number of people working remotely continuously increases, so finding someone who fits your needs is easy. There are 1.57 billion freelancers out of the 3.38 billion workforce worldwide.
So, with such numbers, how are employers paying freelancers abroad?
Keep reading to learn how to pay foreign freelancers and some of the most convenient payment platforms. We’ll also cover the steps to follow when making payments. Let’s get started!
How to Pay Foreign Freelancers
Here are some ways to pay freelancers overseas:
1. Payment Apps
Payment apps function like digital wallets to make and receive payments. You can access online invoicing, scheduled recurring payments, or email transactions using payment apps. Generally, transfers take 3-5 business days to complete when you want to pay freelancers overseas.
Some platforms like PayPal allow users to link credit cards to their accounts, making transactions easier. Different currencies are also available. Some, like Skrill, even allow cryptocurrency.
Examples of reputable payment apps include Payoneer, Venmo, Wise (formerly known as Transferwise) and Stripe.
Note! Ensure that your chosen payment platform is available globally. Some apps like Cash App are restricted to specific regions.
2. Wire Transfers
Bank wire transfers are among the most common ways to pay foreign freelancers. This lets you transfer money directly from your account to the recipient’s. However, this method is recommended for paying large amounts since the fees can be expensive, ranging up to $50 for international transfers.
Sometimes, the recipient’s bank may also charge additional fees that you may be obligated to reimburse. Nevertheless, wire transfers are one of the safest methods of paying foreign employees. A wire transfer takes 2-3 business days to complete.
3. Freelance Marketplaces
Freelance marketplaces like Fiverr, Upwork, Freelancer, and PeoplePerHour are great at connecting businesses with independent workers. These platforms charge a commission fee based on the invoiced amounts.
As a contractor, you can link your credit card, PayPal, or bank account to send payments on the platform. The recipient then adds their preferred method for withdrawals.
Discover how to hire freelancers on Upwork.
4. Automated Clearing House (ACH)
Automated Clearing House, or ACH, is an electronic bank-to-bank payment system in the US. Through international ACH, you can pay foreign freelancers across borders.
Think of it as sending an electronic cheque to a freelancer’s bank account. You can use different platforms like Dwolla to make ACH transfers easier.
To start with ACH, a contractor must fill out an authorization form. ACH takes 3-5 business days to complete, and the fees are a bit lower, especially for massive transfers. However, note the speed might vary for international transfers.
Related Post: How to Pay Remote Workers
5. Cryptocurrency
Cryptocurrency payments are faster and cheaper than traditional global transfer methods like direct deposits. Also, crypto is discreet. You can use platforms like Binance to complete crypto transactions.
Before starting with this payment method, understand the different types of crypto and how to set up a wallet.
The only disadvantage is that crypto fluctuates, which might pose a risk for anyone considering it an asset. Completing an international payment takes 30 minutes to two hours.
If you want to work with a remote worker on long-term projects, getting a contractor is a great option. They usually use the same payment methods as freelancers, so you don’t have to worry about anything when it comes to their salary. But what’s the difference between freelance and contractor?
6. International Money Orders
A money order is a document a contractor sends to a freelancer, who then exchanges it for cash. Examples of money order services include MoneyGram and Western Union. You can purchase an order using a debit or credit card.
However, the $1,000 limit for orders may not make this method usable for larger projects. On the bright side, the transaction fees are relatively lower.
Also, money orders have a more extended expiration date and can take up to 3 years before being dismissed unless cashed out. It can take a couple of days to even a month for the funds to be available on the recipient’s side.
Important! Once a money order is lost or cash out, it can be challenging to get a refund, even if it was a scam or fraudulent activity.
Do Freelancers Get Paid Upfront?
No, freelancers don’t often get paid upfront. The most common way to get paid is by receiving a deposit and security charge, mainly when freelancers deal with new clients. However, the payment method ultimately depends on the contractor’s and recipient’s agreement. So, there are some cases when they are indeed paid upfront.
As a client, engaging in a partial upfront payment will also make you more engaged and committed to the project. Nevertheless, you can always negotiate the terms of upfront compensation to favor both parties involved.
5 Steps to Take When Paying Foreign Freelancers
Below are steps to ensure a smooth process when paying freelancers:
- Settle on Payment Terms.
Start by discussing the rates and when payments will be made. Also, agree on the currency and who will settle additional transaction costs, if there are any. - Deliberate About Legal Jurisdiction.
After agreeing on the payment terms, it’s time to put all details into writing through a jurisdiction clause. This clause helps decide which country will handle a case of misapprehension. Find out how much the minimum wage is for freelancers in the US. - Decide on Tax Compliance.
Note the tax regulations in your country and where the freelancer resides. Also, ensure you comply with labor laws in the freelancer’s country. - Choose a Payment Method.
When considering how to pay foreign freelancers, it is vital to settle on a payment method that is convenient for both parties. Get the recipient’s full name and other essential details required by the chosen payment platform. - Perform KYC Before Making the First Payment.
A Know Your Client (KYC) check ensures you’re not in business with someone who has a criminal history, such as money laundering. Luckily, most apps and banks take care of this beforehand, but it won’t hurt to pay extra attention.
Read more about steps to paying foreign freelancers from LinkedIn.
How Can Freelancers Make Sure They Get Paid on Time?
Freelancers can ensure they get paid on time by tracking billable hours, sending invoices, and charging interest on late payments. You can also issue a small reward for timely payments and conduct thorough research on a client. Signing a contract ensures you’re in a legal agreement protecting you from late payments.
Here is an in-depth look at how to get paid from international clients:
- Track Billable Hours.
You can use a time tracker to record the work done correctly and how long it took. This initiative is excellent, especially if a freelancer gets paid per hour. - Send Invoices on Time.
There are numerous invoicing tools freelancers can use to send invoices. A good invoice software can also remind clients when payments are due. - Charge Interest on Late Payments.
Set a deadline on when payments should be made, and if a client misses the deadline, they pay a fine. This will motivate clients to pay on time. - Reward Timely Payments.
A reward can be a discount on the next invoice or an extra hour of free work, depending on the freelancer’s comfort level. - Do a Background Check.
Research on the client and their track record. Luckily, social media lets you know whether the client is legitimate. You can also read reviews on freelance marketplaces like Upwork. - Sign a Contract.
A contract legally binds contractors and freelancers, ensuring everybody follows the terms. It can also protect your interest as a freelancer when things go wrong.
Embrace Easy Ways of Paying Foreign Freelancers!
There are several ways to pay foreign freelancers. You can opt for wire transfers, international money orders, or ACH. Payment is more manageable if you’re hiring using a freelance marketplace since the platform acts as an intermediary in receiving and releasing payments.
One of the most common and embraced methods is using payment apps since they mitigate the issue of currency differences. Ultimately, a suitable payment method is convenient for both the contractor and freelancer.
