Knowing how to get clients and do great work as a freelancer is only part of the secret to success—you also need to know how to get paid as a freelancer. With various freelancer payment options available, choosing the right method can make all the difference in managing your cash flow and ensuring timely compensation for your efforts.
When selecting and setting your preferred freelancer payment method, consider factors like convenience, fees, and payment schedules. Whether you’re using digital wallets or traditional bank transfers, each option has its own advantages and drawbacks. Understanding these factors will help you determine which payment method is best suited for you.
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How do freelancers usually get paid?
Freelancers typically receive payments through various methods tailored to their and their clients' needs—such as PayPal for quick online transactions or bank transfers for secure, direct deposits. The chosen payment method often hinges on factors like fees, convenience, security, and the specific preferences of both parties.
5 best payment method for freelancers
Let's explore the most popular payment options for freelancers, explaining how each works and highlighting the potential drawbacks, so you can make an informed decision that best suits your needs.
1. Online payment platforms: Paypal and Stripe
Online payment platforms like PayPal and Stripe are widely used by freelancers for their ease of use and speed. These platforms allow you to receive payments quickly and securely via the Internet, supporting multiple payment methods like credit cards and bank transfers. The flexibility and global reach make it easy to work with clients worldwide, with payments often processed instantly.
Drawbacks: These platforms typically charge a fee, with both PayPal and Stripe applying a standard rate of 2.9% plus $0.30 per transaction. Additionally, there may be extra charges for currency conversion or the use of international cards. These fees can accumulate quickly, particularly if you’re handling frequent transactions or working with international clients, which can significantly impact your overall earnings.
2. Bank transfers: ACH and Wise
Bank transfers, including ACH (Automated Clearing House) and wire transfers, allow clients to deposit funds directly into their bank account. ACH transactions are batched and processed in cycles throughout the day, making them more cost-effective.
Wise is a great example of international transfers, offering low fees and competitive exchange rates. This method is highly reliable, secure, and direct, making it a preferred choice for many freelancers who value simplicity and minimal fees for domestic transactions.
Drawbacks: Bank transfers can take several days to process, especially internationally. Additionally, wire transfers may come with higher fees, and setting up international transfers can sometimes be cumbersome for clients.
3. Digital wallets: Apple Pay, Venmo and more
Digital wallets like Venmo, Cash App, and Apple Pay provide instant peer-to-peer transfers, making them ideal for quick payments. These apps are easy to use, mobile-friendly, and allow you to receive payments on the go. The convenience and speed make them especially popular for smaller, everyday transactions among U.S.-based freelancers.
Drawbacks: Digital wallets usually have transaction limits and may not be accepted by all clients, especially for larger amounts. Additionally, they often charge fees for instant transfers to your bank account, and not all apps are available internationally.
4. Cash payments
Receiving cash payments is the most straightforward method, offering immediate payment without the need for third-party services. This method is particularly useful for local clients or informal work arrangements, where simplicity and instant access to funds are key advantages.
Drawbacks: Cash payments require meticulous tracking for tax purposes and come with significant risks, such as theft or loss. They are also impractical for large transactions or remote clients. “There’s no paper trail, which means no record of the transaction or ability to legally enforce payment,” says David Brillant, an attorney with over 25 years of experience in drafting freelance contracts. “Plus, it could lead to issues with tax authorities. I advise against it in most cases.”
5. Paper checks
Paper checks are a traditional payment method where clients write a check that you deposit into your bank account. This method can be appealing to clients who prefer tangible records and can be useful in more formal or corporate settings. Checks are generally seen as a secure form of payment, especially for larger transactions.
Drawbacks: Checks can take several days to clear, and there’s always the risk of a check bouncing if the client has insufficient funds. Additionally, depositing checks is less convenient than digital methods, especially if your bank requires in-person deposits.
How to choose the best payment method for you
When it comes to ensuring a smooth payment process as a freelancer, a few extra considerations can go a long way in protecting your earnings and streamlining transactions. These insights will help you choose the best payment methods and avoid common pitfalls:
- Consider transaction fees: Always factor in any transaction fees associated with the payment method you choose. Lower fees can help you maximize your earnings, especially when dealing with frequent payments or large sums.
- Prioritize security: Ensure that the payment method you use is secure. Opt for services that offer encryption, fraud protection, and secure transaction processes to protect both you and your clients.
- Consider convenience: Choose a payment method that is easy to use and integrates well with your invoicing or accounting software. The easier it is for you and your clients, the less time you’ll spend managing payments.
- Currency conversion: If you work with international clients, be mindful of currency conversion rates and fees. Services like Wise typically offer competitive rates that can save you money when receiving payments in different currencies.
- Client preferences: Some clients may have specific payment preferences. Being flexible and offering multiple payment options can make it easier for clients to pay you on time.
- Freelance payment schedule: Decide whether you prefer to be paid upfront, in installments, or upon completion, and make sure your chosen payment method supports your preferred schedule. “Define clear payment terms in your contract, including specific due dates and interest/penalties for late payments,” Brillant says.
Bonus tips on how to get paid as a freelancer
In addition to choosing the right payment method, using the right tools and strategies can greatly enhance your payment process as a freelancer. Here are some bonus tips to help you manage your payments effectively:
Leverage invoicing and accounting software
Tools like QuickBooks or FreshBooks provide an all-in-one solution for managing your finances. These platforms allow you to create professional invoices, track expenses, and integrate payment options directly through the invoices. This not only streamlines the payment process but also helps you stay organized and ensures that nothing slips through the cracks. Keep in mind that these tools often come with subscription fees, so be sure to factor in the cost of maintaining these platforms when managing your finances (and remember to deduct the fees as business expenses at tax time).
Be prepared for international transactions
If you work with clients abroad, choose a payment method that offers favorable currency conversion rates and low fees for international transfers. Tools like Wise can be particularly beneficial in this regard, offering competitive rates and secure transfers.
FAQs
Which payment method is best for freelancers?
The best payment method for freelancers depends on several factors, including fees, security, ease of use, and the specific needs of both the freelancer and their clients. “I always advise freelancers to consider payment methods with minimal fees and administrative hassle,” says John F. Pace, Certified Public Accountant at Pace & Associates.
Do freelancers get paid upfront?
Not necessarily, but if it’s an option, take it. “This eliminates the risk of non-payment and secures your fees,” Brillant says. “You have leverage before work begins, so use it.”
Pace agrees. “Upfront payment incentivizes quality work and provides cash flow,” he says. “For a seasoned freelancer, it’s a reasonable request that establishes proper expectations.” However, some clients may hesitate to pay upfront, so it’s important to negotiate professionally.
How do I ensure I get paid as a freelancer?
To make sure you get paid as a freelancer, establish clear payment terms in your contracts, including deadlines and payment schedules. Use reliable invoicing and accounting tools to manage payments and track outstanding invoices effectively.
“Bill frequently and follow up regularly; don’t wait until the project ends to invoice,” Pace says. “Be professional but assertive when following up on late payments.”
Another tip: “Don’t do all the work upfront with payment at the end,” Brillant says. “Get paid in installments as milestones are reached.” This approach safeguards your interests and ensures that payment expectations are clear from the outset.