Tiffany S wrote:
Jessica S wrote:
I am not sure I understand this. If the money isn't in the escrow account, a freelancer wouldn't get paid - that's why we all preach "don't do any work if it's not funded in the escrow account first". And many freelancers have done work not funded and didn't get paid for it. And from what I understand, if the payment doesn't go through for some reason, then they take the funds back from the freelancer. So how is escrow underfunded? I am not questioning the validity of this, I just truly don't understand how it can be underfunded...
Jessica, escrow is "funded" when the client clicks to process the payment. That is not when Upwork gets the money. Depending on the payment type and the location of the client, Upwork may receive that money in one to several days.
Let's pretend for purposes of illustration that there's no money in the escrow account and a client funds a $100 milestone. The amount of money Upwork is holding in escrow for you is $100. The amount of money in Upwork's escrow account is zero. Upwork regularly transfers money from it's own operating accounts into the escrow account to bridge that gap.
The client gets charged immediately after funding the milestone. That's the money in the escrow account that gets released to the freelancer upon completion of the project. That's all there is to it. While there may be a small wait period, escrow simply can't be underfunded.
Escrow can't be "underfunded." Money is received in escrow for each fixed price project and held in the escrow account until it is paid out by Upwork under its terms of service after milestones are submitted for payment or otherwise released by clients.
Weekly payouts to freelancers for hourly projects are not funded by escrow Upwork receives from clients for fixed price projects. That would make the whole idea of "escrow" meaningless.
On the other hand, there is no escrow element of the hourly projects payment process. The reason Upwork says it has to periodically borrow money to pay freelancers because Upwork has to pay freelancers for hourly work before Upwork has been paid by clients for the same work.
By definition, this cannot occur with payments for fixed price contracts because Upwork's terms of service specifically state that payouts for fixed price contracts will only occur when good funds are in the related escrow account.
It sounds like you are referring to Fixed-Price Job Offer Deposits. Sending an offer on a fixed-price job requires you to deposit funds for either the whole contract or a lesser amount to cover the first milestone. This deposit will be held in escrow until you receive the work, are satisfied, and release funds to the freelancer or agency.
You may read more about it here.
Florante V wrote:
I have both a freelancer account and client account. When I open a fixed rate project or create a milestone, I get charged right away for that project even before the work starts. It's not underfunded. That's not true.
Upwork holds the escrow money and gets the float during the time that the freelancer works on the project. When the milestone is approved by the client, why does Upwork need to hold on to the escrow for an additional 5 days after approval?
The security period applies to all payments and refunds on all contracts. It gives Upwork time to process and clear the payments, and resolve any disputes before funds are released to freelancers.
Upwork already collected and processed the payment when the client funded the escrow? If not, who holds that escrow?
If the client approved the milestone, what disputes does Upwork think is possible?
Thanks for your question. There is inherent risk in payment processing, driven by the potential of fraud, disputes and chargebacks. We also want to give clients time to review their freelancer’s billed hours and project progress before a payment is released. That is why we established the ten-day review and security-hold period to begin with. But in these unusual times, we understand how important it is for you to get your money as quickly as possible. As a result, we are willing to take on additional risk and potential losses and remove the security-hold period for Hourly contracts for Top Rated freelancers and agencies so you can get your money five days sooner, if you choose.
I totally agree with you. I'm top rated and my contracts are fixed. So, I don't get any benefits from this change. However, I'm glad someone will get their money faster during this period.
As far as I know, once the client released the milesone's funds it will only take 5 days to reflect to your available funds to withdraw. It's almost the same thing I guess. Although, this one is for Top-Rated Freelancers and Agencies only.