New Financial Habits
The Daily Struggle to Get Paid as a Freelancer
We spoke to Zelf contractors and researched payment issues both seasoned and aspiring freelancers face to discover several opportunities for a new fintech panacea.
As more and more people master digital professions and join the remote workforce, self-employment is becoming the new norm. Even if the benefits of working for yourself seem fantastic, becoming a freelancer, you have to figure out how to get paid. Apart from growing competition for clients and unstable income, payment management proudly takes its place among the most tiresome aspects of freelance work.
We spoke to Zelf contractors and researched payment issues both seasoned and aspiring freelancers face to discover several opportunities for a new fintech panacea.
The cost of freedom: strived for the gains conquered by pains
According to freelancers, in 2020, self-employed professionals are facing 4 main “pains”: all kinds of fees, trust issues, payment delays, taxation, and reports. Let’s carefully examine each of them.
Losing money on fees
Seeing fees among the most ubiquitous woes won’t come as a surprise to anyone. If you use payment solutions like Paypal, Stripe, and Transferwise, work for a client in another country, and get paid in another currency, your total fee estimate can reach 10% of your paycheck.
Sometimes it gets ridiculous. I’ve been working for a client in the US. We had to settle for Paypal — he refused to use other options. Because of different countries and currencies, the fees reached 10%.
Apart from wild fees, it also behaves unpredictably: I had my account limited several times for no obvious reason. Tech support is slow and unhelpful.
Lucas, 24, web designer, France
Online payment services are among the preferred ways to get paid. But you have to spend extra for convenience.
Most payment options come with associated fees. Some clients may agree to cover it for you, but that’s not something you can expect. Some expenses you might have to consider when getting paid as a freelancer include:
- Processing fee to receive money through your chosen payment method
- Transfer fees charged by your local bank
- Foreign currency conversion fee
- Withdrawal fees for transferring money from your online account on a freelance platform, from the payment gateway integrated into your website, or your online payment solution account
Trust issues
Platforms like Upwork and Fiverr give access to the global pool of job offers. While they do provide the most opportunities, they also impose the highest fees. The only reason why freelancers sacrifice a significant part of their income is the lack of trust with new and low rate clients.
It’s the chicken and egg problem all freelancers face. You have to build trust with a client, but it requires time, and you need money now. So you settle for Upwork commissions and get mad about them, but still use it. It feels like robbery, to be honest. But unless a new platform or solution emerges, it will remain the status quo.
It feels even more unfair when you are only starting as a freelancer and building your reputation. You get laughable pay after fees and taxes, and no one wants to work with you. Great portfolio makes things better, but only reviews and (better still) client relationships really allow focusing on work instead of hunting decent clients all day long.
Luis, 36, copywriter and editor, Spain
Payment delays
The worst part of freelancing compared to being a standard employee is uncertainty: one month, you get paid twice your average amount, and the next month some cosmic force leaves you wondering whether your work has been automated. You have to be exceptionally rational with your expenses, learn to budget, and plan ahead.
Payment delays make things even worse by multiplying uncertainty and adding unnecessary anxiety. If you work globally, you have to think months into the future:
On average, I wait one week for the payment to arrive. Part of the issue is client laziness, but the real deal-breaker is international payment delays. Whether you are using international credit card payments or digital wallets, you have to wait for several days. It’s pretty sad to have this problem in 2020.
Lisa, 28, illustrator, Germany
Tax reports
The chain reaction continues: payment delays lead to overdue tax reports.
In many European countries, if you work independently, you have to file specific tax reports, sometimes more often than ordinary employees. So you have to stay alert and push your clients to meet the tax deadlines, taking payment delays into account.
I really wish a client could just press a couple of buttons and send me money instantly. But it still doesn’t work that way; you have to go through many steps and wait for weeks. It’s especially frustrating when you have to file your tax reports, and the deadline is approaching, but you still have a long tail of due payments from clients. So you risk filling out the papers wrong and face problems.
Maria, 27, marketing designer, France
Room for change
Sadly enough, prospects of a killer fintech app to do it all look bleak. You always have to put up with some shortcomings, be it instability of cryptocurrencies or Upwork-like 5–30% escrow fees.
Still, everyone feels there should be some middle ground: a solution with a reasonable commission that is truly global, fast, and convenient.
According to 2016 research, in the UK, freelancers lose annually, on average, a whopping £5,394 in unpaid fees. Other European countries must be facing a similar situation, and it’s even worse in developing regions.
Zelf sees freelancers as a valuable audience. Our service is seamlessly integrated into all messengers — the default app of 2020, home to work, play, and everything in between.
With Zelf, work payments are not walled off by fees, bugs, and distrust. Invoices can be saved and sent to clients automatically. More so, they’re easy to track, and forward.
What functions and solutions would make your life easier, dear freelancers?
