Escrow and its Downsides

Escrow is amazing, yet it has its downsides as well. You might want to be cautious and prepared for unexpected events. Through this service, you’ll get your client to transfer the funds into the respective escrow account and set to be released once you complete the project. However, escrow accounts come with fees and monthly payments, so is this the best option indeed?

Escrow is pretty much an arrangement where one of the parties will be depositing funds into an account supervised by a neutral party. The policies and terms of agreements are to be totally taken care of before releasing the money. Once the project is completed the money will be released technically, but this depends mainly on the client. Escrow doesn’t have much control over that. Even if the buyer received the needed work done well, he/she can still reject to release you the funds.

• Cost of Transaction

Escrow companies do not offer their services for free. This might be inconvenient for clients and freelancers since someone has to shoulder the transaction fee for the escrow services. Some escrow companies will charge as much as 5% per transaction, which is a pretty consistent amount for any freelancer. Some clients will agree to pay this fee or maybe they’ll rather split it. Nonetheless, this basically is on your shoulders since you’re the one who wants to make sure that the client has the money to pay.

• Delay of Payment

When the client releases the funds to the freelance professional, the money is not transferred right away into their account. The freelancer still has to wait for a few business days before the amount will appear in their account. This is extremely frustrating since you’ve already waited for the client to release them and since you know that you’re paying some good money to the escrow company to act as a middleman......To read full article, Sign-up for this email training