The Benefits of an Escrow Account
One of the reasons so many service buyers turn to freelance job sites is because the service is free.
From a buyer's perspective, the opportunity to have their projects advertised to a large audience of highly-qualified service providers
from around the world is unmatched.
Service buyers need only pay for the work that has been done,
and only after they're satisfied that the work is done according to their specifications.
At first glance the process seems unfair to service providers.
If they're required to complete the project first what guarantee is there that buyers will actually pay upon completion?
Why couldn't a buyer take the work you've spent hours painstakingly perfecting and disappear into cyberspace forever,
leaving you with nothing to show for your efforts?
How can I be sure I'll get paid?
Right now you're probably wondering whether the convenience of using freelance job sites is worth the risk of not being paid.
How big is this risk? The answer depends on the site you've chosen.
If the site doesn't require service buyers to place funds into an escrow account,
there's always a 50-50 chance you won't get paid.
Without an escrow process you can only assume buyers will hold up their end of the deal and pay when the project's finished.
You're betting on the integrity of the service buyer;
someone you don't know anything about.
Unfortunately many freelancers usually don't realize this all- important detail until they've been burned.
That's why you need to partner with freelance job sites that hold buyers' money in escrow accounts.
What's an escrow account?
An escrow account is an account maintained by an impartial third party.
The sites that incorporate escrow accounts require buyers to deposit funds equivalent to the amount they've agreed to pay
the successful bidder into this account, before the project is allowed to begin.
Regardless of the method used to fund the escrow account,
the funds must be verified meaning checks must first clear,
charges to credit cards must be approved, etc.
Approved funds are held in the escrow account until the work is done as agreed.
Upon a buyer's acceptance, the agreed upon funds are released to the service provider and the project is officially complete.
When project funds are held in escrow,
there's no question that you'll be paid if you've completed the work as promised.
The only time escrow becomes an issue for you is when the service buyer is slow to approve the project.
You have to complete the work by a specific deadline,
however buyers can drag approval out for weeks, and that delays your payment. Fortunately, this situation is rare.
Knowing with certainty that you'll be paid is an important consideration when choosing a freelance job site.
While evaluating different sites, find out whether the site offers an arbitration process, too.
If you can't reach an agreement with a buyer you may need a neutral third party (freelance job site) to step in and make a decision.
I'll talk about arbitration process next.