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June 14, 2021

What is Escrow in Freelancing?

What is Escrow in Freelancing?

Do you remember that feeling of fear when you get a new client and you did not build that trust yet and you think ‘’I hope I will have no payment issues with you’’?

I know I was tossing my mind about it and to be honest, for a good reason! Freelancers act as Managers, Sales Executives, Social Media Managers, and…. Debt Collectors.

Well, those times are long gone because you can welcome escrow in your life. Say goodbye to chasing clients for unpaid invoices.

What is escrow?

If you bought a house, you probably heard about it, however, what is escrow in freelancing?  

An escrow is a legal arrangement between two parties where a third party is holding a certain amount of money until the terms set in place are respected and fulfilled by the two parties:  the freelancer and the client. In freelancing, the seller is the freelancer and the buyer is the client that pays for the service.

In a nutshell, escrow services help freelancers make sure they are getting paid for the work they are doing and assure the client that he will get the service he paid for. If not, the client gets his money-back guarantee.

How is escrow working?

Let’s say you and your client agreed on a logo design that costs $500. The client will deposit $500 in the escrow provider account BEFORE you start work. And that amount of money will be released to you once the client is receiving the finishing product- the deliverable (in this case, the logo).

The money is stuck in an account where nor you or your client can reach it until the project is completed. Once the client approves the work as finished, the escrow provider will release the freelancer’s payment.

Depending on project complexity, you can agree on milestones for each stage of the project.

What escrow providers to trust?

Escrow services are not free to use. The provider is usually charging a percentage fee from the total amount. Some of them are also charging processing fees. The most common escrow provider is Escrow.com. They charge a 3.25% service fee and a 3.05% payment processing fee. They can hold funds up to $5000.

The escrow fees can be paid by the client or by the freelancer, or they split the fee (50%-50%).

Another escrow provider is Upwork itself.

If you get a contract via Upwork, they are already dealing with escrow for you. However, if your client is not on the platform, you can use their feature called ‘direct contracts’’. You can select from hourly pay and fixed-price contract.

With a direct contract, you can create and send a contract to a non-Upwork client within a click. Your client accepts the contract terms and deposits the funds in the escrow. You get the work done, send it over, and get paid when the client approves the work. Easy, isn’t it?

Upwork is charging 3.4% for each active contract and the client does not pay a cent. And the best part of it all is the fact that your client does not need an account to accept the contract or to deposit the funds. 

Guess what, in case of a dispute, Upwork is offering mediation assistance.

You pay $3.40 for every $100 earned; I think this is a well-deserved service that can bring you peace of mind.


You are probably wondering what happens if you submit your work and your client stopped responding. In this case, the escrow provider will release the funds in your favor.

As a freelancer, you deserve payment protection and rest assured that all the sweat you are putting in is well rewarded.  For you, Heaven is to work without being worried if you will get paid.  

Not all clients are non-paying clients, however, not everyone is blessed with unicorns. Better be safe than sorry!

It’s your turn! What methods are you using to make sure you will be paid for your freelance service? Let me know in the comments.


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