How to minimize banking Fees as a Freelancer

How to Minimize Banking Fees as a Freelancer

Being a freelancer means you need to make peace with various payment fees, even more so if you deal with international clients (which most freelancers do). Since freelance income is often highly variable, many people don’t even know how much money they lose in extra charges.

However, those that do dare take a look at the monthly fees imposed by their payment processors are usually astonished by the amount. It can be as high as hundreds of dollars!

The good news is that if you want to achieve your financial goals and lower your fees to a minimum, all you need is a bit of attention and research. Here are some tips to help you.

Compare Fees and Exchange Rates

Many freelancers already have a bank account when they start doing freelance work, so they just end up using it without giving it much thought. However, this can be detrimental to their profit.

Your bank might have served you great so far, but what is it like regarding foreign exchange rates? Traditional banks are notorious for having extremely unfavorable exchange rates, and you may lose a good percentage of your income in conversion.

If you plan to work with international clients, it’s best to ask around and talk to numerous banks to determine which one is the most freelancer-friendly. Apart from exchange rates, you should ask about monthly service, local transaction and foreign transaction charges, ATM fees, wire transfer, and more.

Opening a new account is a short, painless, and inexpensive process, and it might save you a lot in the long run if you find a payment processor that suits your needs.

Bill Your Regular Clients Less Often

Whether you’re using a traditional bank or another payment processor, you’re bound to pay some transaction fees. These can be quite high, but they add up quickly for freelancers even if they’re not.

Ultimately freelance work is gig-based, so you usually don’t get a lump sum at the end of the month. Most people have a variety of clients and tasks, and they get paid for each of them separately. So no matter how small the transaction fee, you might lose a lot of money on it.

However, if you have regular clients or someone has contracted you to do a series of tasks, you can use this to your advantage. Instead of sending invoices for each individual job done, you can group them up and bill the client once at the end of the month. This way, you only get one fee. The charge will be higher for a bigger payment, but still significantly lower than the sum of individual fees.

Accept Checks

It might seem like reverting to the twentieth century, but paper checks are actually an incredible payment processing option that is free of any processing fees. If you’re patient and don’t mind putting in some extra effort in getting paid, you can save quite a few dollars.

However, there are some inconveniences tied to using checks, and one of them is the fact that you have to wait for your check to arrive in the mail. What’s more, there’s always a possibility that it will bounce. Finally, you might have to go to the bank physically to cash in.

The good news is many banks have check deposit apps that save you the physical trip to your local branch.

Another thing to think about before you start using checks is that you’ll have to add your payments to your online invoicing or accounting system manually.

If these additional steps are not a problem, checks are definitely the best way to get paid when it comes to banking fees.

Choosing an Online Money Processing Company

As you can see, traditional banks are probably not the best option for freelancers, especially those dealing with international clients. So it might be a good idea to switch to an online payment processor.

However, PayPal, Payoneer, Stripe, and other popular apps all come with their own fees, so how can you decide what the best option is for you?

As with traditional banks, you need to look into transaction fees first. Depending on your country, these charges may vary. If these fees are fine, you need to check what types of payment methods are available through the preferred app and whether your clients agree to pay you using them.

Next, you need to inquire about currencies. Does the app support your currency? What are the exchange rates like?

Finally, you may be interested in the processing times. Most of these payment processors take three to five days, but you can find those with shorter processing times.

Avoiding banking fees is like an extreme sport for freelancers, but there are always ways to minimize them and the stress of worrying about your finances. Hopefully, this article has helped you understand how you can do so.