It is increasingly more common for freelancers to take on contracts with companies internationally with technology no longer limiting us to working within the same country. This guide provides useful tips for avoiding expensive transfer fees and getting paid on time as a freelancer working with others around the world.
With technology making it easier than ever to connect with people all over the world, one particular section of the workforce benefiting from global modernisation is freelancers. Freelancers already have the advantage of not needing to limit their job search to a five-mile radius around their local area, and with an increasing number of tools meaning time zones and international borders are no longer an issue, many freelance workers have contracts with businesses all over the world.
If you’re a remote freelancer with a number of international clients, one of the most important things you’ll need to consider is how you get paid. Working with international businesses opens you up to far more opportunities within your field, but it can make receiving payments a little more difficult.
In this guide, we’ll be covering some key points to keep in mind when receiving international payments to avoid losing a large cut of your pay to transfer fees and exchange rates.
For the vast majority of contracts, you will bill your client on their own currency. For businesses, this is the safest way to keep the rates they are paying freelancers stable without the exchange rate causing a constant fluctuation in how much you are owed.
Of course, this is not always beneficial for freelancers. Billing your clients in their own currency means you’ll need to use a transfer service that will then convert the payment into your own currency. Here are a few things to look out for when finding a suitable transfer service:
The exchange rate’s tendency to fluctuate can be frustrating for anyone receiving payments from abroad. You could be doing the same work every month but receiving a different income simply because of differences in the exchange rate.
There are two main things to look out for when choosing a transfer service when it comes to the exchange rate: the markup added on to the midmarket rate, and whether the service offers a rate lock-in option.
Some transfer providers and banks add a percentage-based markup on the exchange rate when sending your money abroad. Depending on the service you use, this could vary from 0.1% up to 5 – 6%, which can have a huge impact on how much money you actually receive.
Other transfer providers, such as PagoFX, offer international transfers at the real-time mid-market rate. This is considered the fairest exchange rate you can get at any given time, and will guarantee that you receive the most accurate currency conversion for your international payment.
The exchange rate isn’t the only way you can lose money with an international transfer. Most transfer providers and banks also charge a transfer fee too, which can vary significantly depending on what service you use. Make sure you’re aware of this cost too and how this could impact your payments.
Some money transfer operators offer a ‘guaranteed rate’, which locks in the exchange rate you can see for a set amount of time. This can be useful if you are billing clients based on the exchange rate and fees incurred for an international transfer. Others, however, may prefer to go by the mid-market rate.
An option some freelancers may also use is to propose a guaranteed exchange rate with the international client you are billing. Of course, for this to be a mutually beneficial arrangement it may mean agreeing on a rate that is slightly more favourable to your client. While this can offer you some protection against a fluctuating exchange rate, it could mean missing out on extra cash should the exchange rate fall in your favour at some point in the future.
The exchange rate may be a top concern for most freelancers receiving payments from international clients, but there are other considerations that can all make a difference to the total sum you end up with. Below are a few tips for maximising your payments.
With transfer fees to contend with, you may find it’s more cost-effective to bill your client for a larger sum on a less regular basis whenever possible. For example, is it possible to just send one monthly invoice instead of weekly?
If your international client is paying you via a bank-to-bank transfer, you could be hit by transer fees both by the sending back and your receiving bank. Likewise, using a money transfer service will usually incur fees of some kind – though significantly lower than using a bank.
Make sure you are using a service that is upfront about the fees you should expect to pay before making an international transfer. You may also want to discuss with your client who will pay for these transfer fees. If you have agreed a fixed rate, it may fall on your client to pay the charge for sending your money internationally, although this assumption may not always be the case.
Another concern for many freelancers with international contracts is getting paid on time. International transfer, particular using banks, will typically have a delay of around 3 – 5 working days, but this could be delayed even longer if your client is sending the payment around a weekend or bank holiday.
The transfer service you use is key once again here. PagoFX, for example, process transactions the same day. Often, this means international transfers are made within minutes, provided the transfer is initiated before the cut-off time for that specific country.
Businesses benefit from using a secure, reliable, and cost-effective money transfer service for sending international payments just as much as freelancers do.
As a quick summary, you should look for a money transfer service that:
PagoFX provide a secure way to make international payments as a business, with transparent fees and transfers made at the mid-market exchange rate so you always know what your transfer will cost.
There’s no doubt that freelancing can be a fantastic way to work, opening up more opportunities to work remotely with businesses all over the world. However, there’s certainly the potential to lose a significant portion of your earnings to expensive international transfer fees and unfair exchange rates if you don’t stay aware of these things.
If you are sending or receiving money from abroad on a regular basis, it’s a good idea to make sure you’re still getting the best service possible. Our transparent comparison engine provides a real-time breakdown of the best money transfer providers for your specific transfer, looking at rates, fees, transfer times, payment options and more.
Disclaimer: This article is written in collaboration with PagoFX. All opinions are our own.
Elliott is a former investment banker with a 20 year career in the city of London.
During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making.
During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others.
Yasmin Purnell is a Content Writer and Editor for MoneyTransfers.com. Having over 5 years’ experience writing across a range of industries including finance, insurance, and travel, Yasmin joined the team with a mission to make international money transfers and everything they encompass accessible to all.