The Mechanics of Getting Paid: A Freelancer’s Guide
By Anne Michelsen

Yea! Your proposal was accepted, and you landed a client! Now, how will you get paid?

There are nearly as many ways to receive money as there are copywriting niches. All have their pros and cons. You won’t always have a choice, since many companies that hire freelancers already have their preferred funds transfer methods in place. However, many others will ask how you prefer to be paid. Your choice of payment option can affect both your cash flow and your income, so choose wisely!

Figuring out which method(s) will work best for you can be a confusing and time-consuming task. Don’t worry, though. Whether you’re new to the freelancing game or an old hand on the lookout for improved options, here’s a quick rundown of some of the most popular ways for freelancers to get paid today — and the pros and cons of each.

Checks: Oldies but Goodies

The good, old-fashioned paper check sometimes gets forgotten in this digital age. But many companies who hire copywriters routinely pay by check, and some freelancers actually prefer them.

The Pros:

One of the nicest things about checks is the feeling you get when you open your mailbox and there’s a big fat one inside! It’s somehow gratifying to have tangible proof you can wave in the air in front of your significant other that you’re not actually spending all day on Facebook. But there are practical reasons to like them, too.

The best thing about checks is that it doesn’t cost you a penny to receive them. So (if you can forget about taxes for the moment), you get to keep ALL your hard-earned dough. Feels good, doesn’t it?

Checks are also easy to keep track of, IF your bank scans them and gives you access to their images through online banking. If you ever have to look one up, all the info you need is right there.

The Cons:

If your bank doesn’t provide online access to your check images, and for whatever reason your books get jumbled up, it can get messy.

Unless your client is very local, you’ll have to wait several days for your check to arrive in the mail once your client issues it. Once the checks finally arrive, they are also easy to lose (BIG con if you’re the less-than-organized type.) And, you will have to pry yourself away from your desk and hike over to the bank before the money is actually officially yours.

Direct Deposit

Some clients will want to pay you by direct deposit. This is just what it sounds like — a direct transfer between their bank account and yours.

The Pros:

If a client offers you this option, take it! It’s completely brainless on your end — you just go about your business, and the money suddenly appears in your bank account. If only everything were that easy!

The Cons:
The only problem with direct deposit is that the client has to initiate it through their own bank. So if they’re not already set up to do direct deposits, they might perceive the process as a hassle. Most freelancers don’t even think about using this method unless it’s offered, but it doesn’t hurt to suggest it as an option. Later in this article, we will cover a direct deposit-style payment platform that you can initiate, though, so keep reading!

Merchant Accounts

Simply put, a merchant account is a special type of bank account that allows you to accept funds directly from your clients’ credit or debit cards.

The Pros:

Accepting funds from credit cards is convenient for your clients, and merchant accounts typically have lower transaction fees than payment processors like PayPal. Most will let you set up recurring payments, which is handy for retainer arrangements. Some merchant account companies also provide business support.

The Cons:

Typically, a merchant account will charge you a percentage of each transaction. Sometimes the company will also charge a per-transaction fee. On the face of it, these fees are typically lower than PayPal and similar payment processors. However, unless your own fees are high and/or you are taking in a large volume of work each month, it may not be worth it. That is because you will also be charged a monthly fee — and sometimes other fees, as well.

Another thing to watch out for is your contract. Many merchant account companies will hold you to a long-term contract, often lasting several years. Getting out of such a contract can be dicey, and may involve steep termination fees, so think carefully before signing one. Alternatively, you can go with a company that doesn’t require a long-term contract, such as DirectPay.

PayPal

PayPal has become many entrepreneurs’ gold standard for payment acceptance. It is a payment processing platform that allows you to accept any kind of credit or debit card online, through an invoice, or — if you sign up for the PayPal Here option — in person or over the phone. Clients can also pay you directly from their bank accounts.

The Pros:

As indicated above, PayPal is incredibly versatile. It offers options for nearly any transaction type you can think of. You can even invoice recurring payments.

PayPal is easy for both you and your clients. It is widely used and recognized, so clients are unlikely to balk at using it. And not only does it allow you to receive payments instantly, but because PayPal can be used to pay others, as well as to accept client payments, your received funds are instantly available for you to use with any merchant that accepts PayPal payments.

The Cons:

PayPal charges a 2.9% transaction fee, plus $.30 per sale. While this is a small price to pay for the convenience of the service, it can add up to significant amounts over time. For instance, if you make $5,000 per month and run it all through PayPal, you’ll be kissing goodbye to over $1,740 over the course of the year. Ouch.

Keep in mind, though, that the fee doesn’t necessarily have to come out of your own pocket. Sometimes clients will pay the fee. I have an agency client that insists on paying with PayPal, but they cover the fee so I don’t complain (although I think they’re crazy.) Many freelancers just charge a bit more to make up the difference. (However, you could argue that if your client is willing to pay a little more, why not pocket it yourself?)

Another common complaint about PayPal is that it has bad customer service. This writer has never had reason to find out, but that’s the word on the street. Also, some people have reported problems with PayPal locking their account due to “suspicious” activity — which, in some cases boils down to simply a larger-than-usual transaction. So be warned.

Square

Square is another popular payment processing service that allows you to accept payments in person or over the phone. When you sign up for Square, the company sends you this cool little swipe device in the mail that you can plug into your smart phone or tablet and swipe cards on-site. You can also accept payments over the phone. It’s even possible to set up a free online store with Square.

The Pros:

Square is super simple and easy to use. It also deposits your money into your bank account with lightning speed. The platform comes with invoicing and appointment-scheduling features, which many freelancers may enjoy. It also integrates with Quickbooks and several other types of bookkeeping software.

The Cons:

Square is really meant for small brick-and-mortar businesses or entrepreneurs who do a lot of face-to-face selling. At 2.75% per swipe, the transaction fees are slightly lower than PayPal’s. However, if you enter payments manually, the fee jumps to 3.5% plus $.15 per transaction — and how many freelance writers sell much work face-to-face?

Frankly, I found Square to be simply stupid when it comes to doing the books. It doesn’t have a standard printable statement and doesn’t identify for you where each transaction came from. However, bookkeeping is not my long suit, so maybe I’m missing something.

Dwolla

Direct deposit, made easy for you and your clients? That’s Dwolla.

Dwolla is a payment platform that allows you to send and request money free of charge. (In the past, Dwolla charged $.25 per transaction, but not anymore. Apparently, Dwolla makes its money in other ways and decided to drop the charge.) The idea is to provide a merchant account alternative that bypasses swipe fees.

The Pros:

The best thing about Dwolla is, it’s free! And, you don’t have to hike to the bank to deposit your funds.

Once you sign in, Dwolla’s interface is clean and easy to use. It’s simple to request and receive money.

Dwolla also offers a form builder, so you can plug a payment form right into your website. All you need is one master form: when you send your client an invoice they can send their payment using the same form regardless of amount or type of project. Easy, peasy.

And, did I mention it was free?

The Cons:

Dwolla’s website is targeted to a different audience and is rather baffling if you’re casing it out and just simply trying to understand what it can do for a freelancer. (I suggest signing up if you think you might be interested, since the explanations are better outlined inside the member website than on the outside. Dwolla has very good customer service too, so if you’re still confused, just ask for help.)

To pay you with Dwolla, clients will need to set up their own account with the service. This won’t cost them anything, but some clients may not want to bother. Also, although Dwolla is growing in popularity, it doesn’t yet enjoy the same name recognition that PayPal does, and some clients may balk at it for this reason.

Dwolla also isn’t as versatile as PayPal. Clients can’t pay you with credit cards through this service.

And, it can take a long time for your payments to clear — expect to see your money in your account 7 to 10 days after your client has paid. (You can upgrade to faster service, though, for a monthly fee.)

What’s the best payment platform option for you?

So, there you have it: a half dozen of the most popular ways to pocket your profits. While there is no one perfect solution for anyone, these options offer the enterprising freelance writer plenty of choice. You’ll just need to decide what works best for you in terms of fees, convenience, and willingness of your clients to comply with your choices.

If you’re like most freelancers, you probably use more than one of these options. And of course, there are many other options out there not mentioned in this article. What is your favorite way to get paid?

This article, The Mechanics of Getting Paid: A Freelancer's Guide, was originally published by B2B Writing Success.