Options for Paying Your Subcontractors

Subcontractors or a virtual assistance team are self-employed professionals that can help add value to your business. Your clients pay you, but you pay your subcontractors. While this does create a little more work for you, the increase in your productivity will more than pay for the extra work.

There are several ways to make this system work.

Pay Per Hour or Per Project

First, you need to choose a payment method for a project. Are you going to charge your client an hourly rate or a per-project rate? You’ll also need to find out if your subcontractor is going to charge you hourly or by the project. A subcontractor should always be paid even if your client is late paying you.

Second, you’ll need to find out how much your subcontractors charge or will accept for the work you need them to do. This way you’ll know how much you should charge for your all of your services including project management, client communication and editing. Add these numbers together, along with any other necessary fees, and you’ll have the amount you need to quote the client (although I recommend adding a small contingency fee as well).

Remember to charge enough to cover your subcontractor’s fees, the time you have invested in the project and any overhead that might be associated with the project. After you figured out the total amount, you’ll need to make sure you sign a contract with the client and the subcontractor before working on a project. Your lawyer will tell you what should be included in the contract.

Sending Payment

Subcontractors or a virtual assistant team have different payment policies. Once the project is completed, some subcontractors invoice immediately. Other subcontractors invoice monthly or even weekly. Payment policies or methods should be mentioned during the first interview with anyone you’re thinking of outsourcing work too.

Another way some contractors may want paid is by selling you a certain amount of hours or tasks per month. She only works with you until the hours are used. This is a good arrangement if your subcontractor is completing tasks that aren’t directly related to specific clients or projects.

Come to an agreement ahead of time about specific payment arrangements. PayPal is generally used to pay online subcontractors. In some cases, you may be able to pay via credit card, or the subcontractor may accept checks.

A subcontractor with a small business may require you to pay your invoice immediately. Some larger operations though may allow you to pay your invoices 10 to 30 days after receipt. This information should be included in your subcontractor’s polices.

What If the Client Doesn’t Pay?

If your subcontractor is charging you for a specific client-related project and the client doesn’t pay, you may not want to pay your subcontractor.

This is an important subject and should be covered in your contract with the subcontractor. But even if it’s not, as the project manager, it’s not only your responsibility but it’s ethical to make sure you pay those you outsource too, even if you don’t get paid. It’s also your responsibility to ask your client for payment.

Treat your subcontractors well by following their payment policies and never under charge your clients. This will help make your business successful.

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