First and foremost what is an ‘Escrow’? Well quite simply it’s a third-party account which holds money on behalf of a client/customer which then releases the funds to the service provider only once a job is completed.
Customer Pays -> Escrow Account Holds Payment -> Job is Complete -> Escrow Account Releases Funds to Provider
So why would you want an escrow service? Well the benefits of an escrow are two-fold:
- It’s much better as a business if you can take payments upfront and not have to wait the typical ’30-days’ for an invoice to be paid and with an escrow you know the client has paid the money straight away.
- If you offer a service which needs to be completed before final payment then it is much more trustworthy for a client if they’re not paying you upfront before completing the job and have control over releasing the funds once the job is completed.
With that all out of the way, now I can move onto how to actually set up an escrow for your business!
It’s actually much simpler than you’d expect, there are numerous escrow service providers out and they do all the hard work for you! There are numerous places you can use but from my personal experience I recommend Transpact who offer the escrow service for a low-cost flat fee which is much better in my opinion than other providers who charge a percentage per transaction, since if the payment is large then the percentage you pay to the provider is going to be large!
To setup an account and start using an escrow payment service you simply need to follow these simple steps:
- Visit Transpact’s website here and fill in all your details to register.
- Once signed up you can then ‘Create a Transpact’ which is where you fill in all the information about price/payment terms etc for each job.
- An email with all the information is then sent to you and your client which you both agree on.
- The client then pays that amount and the payment is held by Transpact.
- Upon completion of the job, the client simply releases the funds via their Transpact email.
It’s as simple as that!
As always I recommend looking around before making any final decision and even trial different companies to see which works best for you, but from personal experience I’ve found Transpact to be the easiest method.