The Lowdown on Milestone Payments

Some of the risks of offshore work arrangements are getting quality work (for employers) and receiving payment (for freelancers). It’s difficult to trust employers or workers that you haven’t met (or won’t ever meet) so many are wary of hiring and working online. To minimize the risks and to give its users peace of mind, Freelancer.com has created a system called Milestone Payments.

The Milestone Payment System is a great service for both employers and freelancers. It sets aside funds for payment that will be released in full or staggered depending on the desired schedule or upon accomplishment of agreed objectives in the project.

The amount set aside for every objective is at the discretion of the employer, but freelancers can come up with their own milestones as well. Proposed Milestones is a new feature that allows freelancers to propose a breakdown of tasks with corresponding amounts and deadlines.

This payment scheme not only offers security, but also motivates the freelancer to take the job with utmost importance, knowing that payment is immediately due once the project is met with 100% satisfaction.

Both employers and freelancers can view the milestone payment but only the employer can release it and only the freelancer can cancel it (except for the Service Provider who is a Freelancer.com staff). This gives each party half of the control over the Milestone Payment.

Milestone Payment entails several short processes that are unique to employers and freelancers. Each is tackled below.

Employers

Employers have the freedom to reserve the funds for a certain posted project even if it has not been awarded to a freelancer yet. Doing this shows how serious the employer is and gives credibility to the project. As a result, high-quality freelancers are driven to bid on the project.

Once set aside, the Milestone Payments will be held by Freelancer.com until both parties agree to its release.

Benefits of using Milestone Payments:

  • Removes risk of paying outside of Freelancer.com
  • The employer stays protected by Freelancer.com if something goes wrong
  • Increases employer reputation
  • Projects are started faster (freelancers are keen on starting immediately knowing that payment is ready).

How to approve Proposed Milestones:

  • When reviewing bids, look for the number of milestones a particular freelancer can deliver under the amount proposed for the project.
  • Hover your pointer over the number of milestones (displayed alongside the number of days the project will be completed).
  • Tick the Shortlist box if you like the proposal but wish to check on other bids first. If you’ve decided to hire a certain freelancer, click on the Award Project button. As always, you have to confirm the award.
  • Click Create Milestone and you will be prompted to deposit payment for the milestones which will then be released after every task done.

How to set a Milestone Payment:

  • Click New Milestone Payment on the Finances menu
  • Click Create Milestone under the Milestone tab in the Manage Transactions section
  • You can either create a Milestone for an active project or directly for a user. It is strongly recommended that you always create a Milestone Payment for a project rather than directly for a freelancer. In the search box type in the name of the project or Freelancer you wish to create the Milestone Payment for.
  • Enter the amount to be transferred and a description for the Milestone Payment
  • Click the Create Milestone button

Note: Use this option if you don’t approve a freelancer’s Proposed Milestone.

How to release a Milestone Payment:

  • Click Financial Dashboard from the Finances menu
  • Under the Milestones tab in the Manage Payments section ensure Outgoing is selected in the top right to see list of Milestone Payments you have created
  • Click the Action drop down on the right of the Milestone Payment you wish to release then select Release from the menu
  • This will display a box where you can specify how much of the Milestone Payment you would like to release. You can release the entire Milestone Payment or only a portion.

For the protection of Freelancers, Milestone Payments cannot be cancelled by the Employer. If the employer feels that the freelancer isn’t entitled to a Milestone Payment, they should first contact the freelancer to settle things. If an agreement cannot be reached, immediately go to Freelancer.com’s Dispute Resolution Service.

Once the Milestone Payment is released, there’s no way for Freelancer.com to recover the funds. Make sure that the project has been completed and you are satisfied with the results before releasing any pending Milestone Payment.

Freelancers

Before starting any work, Freelancers should ask for Milestone Payments to ensure that payment will be given once quality results have been delivered. Make your Proposed Milestones as detailed as possible by including the tasks you aim to complete, the expected time frames you will work towards, and what price you charge for each completed milestone.

Benefits of using Milestone Payments:

  • Ensures that the freelancer is paid after reaching every milestone set by the employer
  • Helps build freelancer reputation
  • Adds points to a freelancer’s Completion Rate

How to create Proposed Milestones:

  • After placing your bid and writing your proposal, go to the Proposed Milestones section and describe each task/milestone you will deliver for the project. You have to be very specific to avoid miscommunication between you and the employer.
  • Indicate how much each milestone costs. You should have an appropriate price for every milestone. In this way, you can get paid after completing a task and you don’t have to wait for the entire project to finish. The breakdown prices must add up to the price of your bid on the project.
  • Click Submit Proposal.

Note: Freelancers will be able to propose up to a maximum of 10 milestones.

How to check if a Milestone Payment has been sent:

  • Click Financial Dashboard from the Finances menu
  • Under the tab in the Manage Payments section ensure Incoming is selected in the switcher. This table lists all your incoming Milestone Payments

How to cancel a Milestone Payment:

  • Click Financial Dashboard on the Finances menu.
  • Click the Milestones tab and choose Incoming.
  • Look for the Milestone Payment that you want to cancel and choose Cancel under Actions.

The Milestone Payment system is free and ensures that employers get the quality work they need while freelancers get paid for their efforts. Start hiring and get work done by posting a project, or start earning by signing up today.

Nikki Hernandez
Nikki Hernandez Staff

Wired and Inspired | Content Coordinator, Freelancer.com

I'm the coordinator of Freelancer's Case Study Program. I write inspirational success stories of employers and freelancers. When not busy writing, I play video games.

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