Alan Safahi, a leading San Francisco-based entrepreneur and startup founder, has made substantial research on freelance payment methods. According to Alan Safahi Orinda, freelancers represent over 35% of the workforce worldwide, and there are over 1.1 billion freelancers of the total 3.5 billion people in the global workforce.
Safahi’s research and analysis show that freelancers contribute more than $1 trillion to the U.S economy and about 5-7% of the total gross-domestic-product (GDP). About 48% of freelancers charge a fixed rate when selling their products or services, while 29% follow an hourly approach, and 23% experience use both methods.
There are numerous ways to receive money, and each method has its own advantages and disadvantages. Freelancers don’t always choose because most companies hire people with their preferred funds’ transfer methods implemented. However, many companies ask freelancers about their preferred payment methods. Therefore, it is crucial to choose wisely to maintain your cash flow. Read on!
Although many freelancers have forgotten the old-fashioned paper checks in this digital age, some companies hire freelancers to pay by check routinely. According to Alan Safahi, some freelancers prefer checks to other payment methods.
The biggest advantage of checks is that it doesn’t cost you money to receive them. However, the downside of checks is that you will have to wait a few days for your check to arrive if you have a local client.
Some freelancers prefer receiving payments by direct deposit method. A direct transfer occurs between the client and the freelancer’s bank. Alan Safahi says if a client offers this option, you should take it because it is brainless on your end.
For instance, you offer your products or service, get the job done, and the money appears in your bank account. However, the only downside with direct deposit is that your client has to initiate the process through his own bank.
PayPal is the gold standard for many entrepreneurs to accept payments. It is one of the most popular payment processing platforms, allowing freelancers to accept different debit and credit cards online. Likewise, your clients can pay you from their bank accounts directly.
According to Alan Safahi Orinda, PayPal is an easy and effective method for freelancers and their clients. Because the platform is widely recognized and used, clients usually don’t balk at using it. Similarly, it enables you to receive payment instantly.
The downside of PayPal is that it charges a 2.9% transaction fee and $.30 per sale. Although this is a small free, it adds up to substantial amounts over time. For example, if you earn $3,000 per month and receive payments through PayPal, you will pay around $900 over a year.
A merchant account is a unique bank account that enables a freelancer to accept money from their clients’ debit or credit cards directly. Most clients find it convenient to pay funds from credit cards because merchant accounts have lower transaction fees than payment platforms like PayPal and Payoneer.
Merchant accounts likewise enable freelancers to set up recurring payments and offer business support. The downside of a merchant account is that it will charge a portion of each transaction.
There are numerous ways to pocket your profits from selling your services and skills through freelance platforms. However, there is no single perfect product or solution for you, meaning you need to choose the one that best fits your needs.