Hiring contractors is a bit different from other services. But obviously, when you hire contractors to work on a project for you, they must be paid. Thankfully, there are several options for payment.
If you’re curious to learn more about how to pay contractors, just keep reading.
Perhaps one of the most standard ways of paying contractors is by check. The good thing about writing checks is that you can keep a detailed history of the payment transaction. When you write a check, there is physical evidence of the payment attached to the invoice.
Not only that, but you can also leave the amount section blank until the project is completely done. That way, you can write the exact amount that the contractors require.
On the other hand, there is a bit of a downside to writing checks. There’s a delay in the time it takes to process a check through the bank and the funds clear for the contractor.
This process takes even longer when checks have to be mailed.
ACH stands for Automatic Clearing House. It’s a mechanism used to transfer funds between two different accounts. This is either done by direct deposit or an automatic payment.
However, payment generally takes several days to clear. ACH is best for contractors receiving regular payments from an individual or business.
Electronic Payment Services
In today’s world, there are many payment services that are independent from banking institutions. Platforms like PayPal, Venmo, and Wise make paying contractors very simple. In some situations, these services require a fee for the money to be transferred.
The good news is, the funds are available instantly. Plus, using services like PayPal and Venmo has advantages for the client and the contractors. For the clients, they don’t have to worry about checks, and they can send the payments from their PayPal account.
For the contractor, digital payment services are easy because they can get the money fast and transfer directly into their bank. Not to mention, please platforms keep meticulous records of payment transactions. Therefore, the client and the contractor have a digital statement of the payment.
Wire transfers take place between two banks. It’s quicker than ACH, but it’s also more expensive. In most cases, it requires a fee from both the sender and the recipient.
Click for more information regarding the financial reports that contractors are responsible for.
Understanding How to Pay Contractors
Now that you know more about how to pay contractors, you should be able send money to your contractors with no problem. The payment methods listed above are some of the general ways in which you can compensate the contractors that you hire. However, if they accept other forms of payment, consider one of those as well.
Did you learn anything from this article? If so, continue browsing our website to discover more informative content.