Payment Methods and Mechanisms
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An advance payment is money paid to a freelancer before work commences. The use of advance payments is a controversial topic in the freelancing world, with strong arguments pro and against. In a nutshell, professional freelancers like these payments because they improve cashflow and reduce the chances of not getting any payment for their work; clients are usually hesitant because of many incidents where the advance payment is taken and no work is performed.
Accordingly, you’ll see a wide range of policies with respect to it among sites. Some allow and even encourage advance payments, while others not only discourage it, they threaten to ban outright any freelancers who ask for payment up front. The sites that take the latter approach do so largely out of a desire to protect clients from being ripped off, as mentioned above.
Note that some consider the availability of a proper escrow system to be a valid replacement for advance payments. Not everyone agrees, but it’s still pretty clear that escrow solves the Internet trust problem much better than advance payments do. In effect, an advance payment just splits the risk between the two parties; it does nothing to ensure that neither gets ripped off.
The final part of the payment process is withdrawing money from your account on a freelancing site so you can use it to pay the bills and take those lavish vacations that 9-to-5ers assume we freelancers can take whenever we want. :) Most sites offer a variety of methods for doing this, largely as a convenience for freelancers. After all, if they don’t provide a way for you to get your money, you’ll go elsewhere, and nobody wants to lose a customer over something like that.
The most common payment methods supported include paper check, direct deposit bank transfer and electronic payments using services like Paypal. Some sites also support other electronic payment services, and some even let you put money onto a debit card issued by the site, which you can use for payments like any other debit card.
A site’s withdrawal policies dictate when and how a freelancer is able to remove money from their account. Many sites let the user do this at will, while others permit payments only as part of a monthly or weekly billing cycle.
Some sites also introduce “hidden” fees into the disbursement process. (I put “hidden” in quotes because they don’t specifically try to hide these fees, but most freelancers don’t keep them in mind when assess a marketplace’s overall cost.) Fortunately, these are usually fairly low, and when implemented for specific disbursement methods, they have a rational justification; it costs time and thus money to cut a check, for example. Most sites have at least one option for withdrawing money that is either free or very inexpensive.
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Last Site Update: December 13, 2011
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