I was paid late on my first ever freelance consulting project. I might have come from a strategy consulting background, but I didn’t know how to effectively run my freelance operations. I sent the final deliverables to my client along with my invoice requesting immediate payment and…waited. I sent a reminder after one week. I wasn’t too nervous given we had a contract, but with no email the following week after more reminder emails I was starting to get worried. My response finally arrived – my client had been on holiday all of that time and completely forgot – and I received my payment by the end of the month.

I’m sure this story resonates with you given that 74% of freelancers have experienced problems with getting paid. If anything, you probably thought I was overreacting in such a short timeframe. At the time, I didn’t realize that Net 30 payment terms were the norm and that the average payment takes 48 days to complete.

After reading the hundreds of guides on ‘How to Get Paid as a Freelancer’, I still wasn’t ready to accept that this is how it had to be. Why should I be expected to give my clients free credit, and still have to send reminders for my invoices every month? This conviction grew as I became more experienced and I struggled to have the necessary financial reserves while trying to pay for business school.

It finally struck me that the answer had been staring me in the face the whole time – the escrow method of freelance payment. I had been subcontracting most of the research component of my work through Upwork, where I always paid via escrow to give myself more money and to motivate my freelancer to do a good job knowing the money was there. It shocked me that this system hadn’t become mainstream in the US freelance economy, but quickly learned that there was no easy way to set up this system as an individual freelancer. And I definitely didn’t want to pay Upwork’s 20% fees just to access their payment infrastructure. That was when I set about building a platform to bring the escrow method to the broader freelance economy.

But what is the escrow method of payment?

The approach is simpler than the typical ‘Deposit + Net 30’ setup. The freelancer lays out the payment schedule at the start of the project. The client pays the project fee upfront, into a secure third-party escrow account. Often projects are broken down into milestones so that the payment amount is smaller but more frequent. The escrow provider holds the money until the project is completed when the funds are released to the freelancer. If there is a dispute between the two parties, the third-party mediate the disagreement and will quickly bring it to an agreeable resolution.

The escrow method solves the problems that many accepted are inherent in freelance payment. It offers security for both parties. Freelancers guarantee their payment if they do the work. Clients are happier to pay into escrow than to offer an unsecured 50% deposit. The freelancer gets paid faster overall – even forgoing the deposit they are paid 24 days faster on average. Both the freelancer and their client would save on average $700 in costs and time from using the escrow method over the standard approach on a $20,000 contract with standard terms.

This approach will be new for many people and will take some getting used to, but there are now tools and platforms to help you adjust to this new way of working. You won’t ever look back.


David is an ex-freelance consultant and now the CEO + Co-founder of LifeWork. They have just launched their escrow-based payment platform that is getting freelancers paid faster, more securely, and without an invoice or 1099 in sight.