What are the best practices for paying freelancers abroad?
Ready to tap into the global talent pool? Check out these best practices for paying freelancers abroad.
A note: Please kindly note that Cenoa does not provide investment, tax, legal or accounting advice; and this material has been prepared for informational purposes only. You should consult your own advisors before engaging in any transaction. You can find detailed disclaimers on Cenoa’s website.
As businesses continue to reap the benefits of tapping into the global workforce, the demand for international freelancers has surged dramatically.
More than 90% of global businesses employ freelancers and freelancers are based in areas like Latam, Africa, and Asia.
Working with freelancers is highly beneficial to both parties, offering flexibility, independence, and an expanded pool of opportunities to choose from. Before expanding your search, you’ll first want to consider how you’ll fairly pay your freelancers abroad — especially those from emerging markets.
6 best practices for paying freelancers abroad
Developing a good relationship with international freelancers can help ensure reliable work — and payments are important for establishing trust. Here are a few best practices for paying international freelancers, from paying them quickly to using secure transfer solutions.
1. Minimize or eliminate transfer fees
One of the primary considerations when dealing with international payments is the potential burden of transfer fees. Traditional banking methods often come with substantial fees that can significantly reduce the freelancer's earnings. To foster a positive, fair, and empowering working relationship, consider minimizing or eliminating these fees. Research and choose payment platforms that offer cost-effective or fee-free transactions, allowing freelancers to receive their full compensation promptly.
2. Pay freelancers on time and within 30 days of completing work
Timely payments are essential for maintaining a healthy relationship with freelancers abroad. But 74% of freelancers report not being paid on time. Just like any other professional, freelancers rely on their earnings to meet their financial commitments and manage their livelihoods. Aim to pay freelancers within 30 days of completing their work to demonstrate respect for their time and effort. Consistent and punctual payments will build trust, encourage long-term collaborations, and enhance the overall productivity of the team.
3. Explore alternative freelancer payment methods to banks
While traditional banking methods have been the default choice for international transactions, they may not always be the best banking option for freelancers. 42% of freelancers believe that the choice of payment method from an employer is important, and how businesses pay freelancers can impact a company’s ability to attract and retain top talent.
Explore alternative freelancer payment methods that are tailored to the unique needs of freelancers working across borders. Digital payment platforms and blockchain-based services have emerged as popular choices, offering faster transfers, reduced fees, and increased security. Embrace these modern, more flexible solutions to streamline the payment process for you and your freelancers abroad.
4. Evaluate holding periods and transfer times
Take time to understand the holding periods and transfer times associated with different payment methods. Some banks and payment platforms may impose extended holding periods, leading to delays in the freelancer receiving their funds. Evaluate these factors before choosing a payment method to ensure that payments reach the freelancer in a reasonable amount of time. Minimizing unnecessary delays will facilitate more efficient project deliveries.
5. Use trusted money transfer tools
When it comes to international payments, security is paramount. To safeguard your funds and the freelancer's earnings, opt for trusted money transfer tools with a proven track record of reliability. Blockchain currencies like stablecoin or digital dollar are on the rise thanks to their use of advanced encryption and fraud protection measures that ensure the safety of your transactions and minimize the risk of payment mishaps and potential financial losses.
6. Provide documentation for every payment
Clear and comprehensive documentation helps businesses and freelancers maintain transparent financial transactions and keep their books squeaky clean. Each payment should be accompanied by detailed documentation outlining the project, payment amount, payment date, and any relevant terms and conditions. This not only helps you maintain accurate records but also ensures that freelancers have a clear understanding of their compensation. It demonstrates professionalism and commitment to maintaining a trustworthy and cooperative partnership.
Choose freelancer payment methods that work best for you and your international contractors
Working with international freelancers opens up a world of opportunities that enable businesses to thrive and tap into diverse talents and perspectives. However, to maintain a successful collaboration, optimizing the payment process is crucial. By following the best practices outlined above, you can ensure smooth and secure payments for your freelancers abroad.
By choosing Cenoa’s borderless super wallet as a payment method, you ensure that your business aligns with your freelancers'. Learn how you can avoid the hassle and fees associated with traditional banks by switching to Cenoa’s instant and free USDC transfer service as a freelancer bank alternative.