If you’re outsourcing any components of your business’s back office practices, one of the first things you should consider is how you will pay your outsourcing partner. There are many methods to make payments to an offshore outsourcing firm or a freelancer, depending on their preferences for receiving funds and your business practices. Take a closer look at some of the methods used and the pros and cons of each.
Ways to Pay Outsourcing Partner Companies
Most companies accept payment in a number of ways, including via escrow, check, wire transfer, PayPal or credit card. It does depend in many cases on whether you’re outsourcing partner is located in the United States or offshore, so it’s important that you take these things into consideration and discuss with them first how they prefer to receive funds.
- Escrow - Escrow is highly recommended in a number of cases, especially if it’s not possible to provide a full deposit for the project before starting. Most providers will request either deposit or escrow to start the project.
- Check - Checks are accepted widely domestically, however, if you are sending a check outside the country, often it takes upwards of 45 days to clear.
- Wire Transfer - Wire transfers are immediate and highly effective for large projects, but may not be as effective for smaller projects due to the $50 surcharge often attached.
- PayPal - PayPal is an increasingly popular form of payment for online service providers, but there is a poor service refund guarantee, and therefore should be used at your own risk.
- Credit Card - If your outsourcing partner is in United States, credit card payment is also an option. However, keep in mind that credit cards are not always acceptable way to pay outsourcing partners in other countries or when they don’t accept credit cards.
Due to the number of payment options, and because not all payment options work for offshore outsourcing partners, it’s recommended that you discuss the methods that work best with the company you hire before selecting any one payment method.
Prior to Paying Outsourcing Partners
Beyond the type of payment that you make, other factors to consider include who bears the service charge or bank charge depending on what type of payment you use, the ideal duration on credit for small and larger projects, and how taxes will be collected or reported, depending on the country of payment and country of receipt. Back office outsourcing often happens over international borders, so it’s important that you discuss all of these issues with the company you hire before starting a project. It may be different depending on where you outsource these tasks.
If you’d like to learn more about how to pay outsourcing partners domestically and overseas, or if you’d like to learn more about outsourcing back office tasks, contact the experts of BackOffice Pro today.
