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How to get expenses paid for on Upwork? (And a tip to keep your rating...)

c000
Active Member
Co v Member Since: Feb 23, 2016
1 of 23

Hey everyone!

 

How do I charge my client for expenses? On my current project I need to get a license for some 3rd party software, but I can't find any documentation (other than some vague mention in some policy) on how to actually get expenses paid.

 

I made the mistake of offering my client to just pay me for the license (which is a fraction of the total project cost) through paypal (as this seemed like the easiest way to solve the issue), but my account was suspended soon after for suggesting such a thing.

 

Thing is, nowhere on upwork is there any clear info on how to deal with expenses. And as a result I now have to wait 90 days to get my top rated status... (I'm trying not to be bitter)

 

So the question is: What is the proper way to deal with expenses?

 

And the tip is: Don't suggest payments outside of upwork even for relatively small amounts of money, and even if you know / trust the client. 

alexsis
Ace Contributor
Iuliana U Member Since: Jul 30, 2009
2 of 23

Hi

Sorry to hear about your unfortunate suspension - at least it's temporary.


One way to add additional payments to the contract is to give a bonus to the freelancer. To quote from Upwork FAQ:

 

Add a bonus (optional)

To make a bonus payment (not connected to a milestone):

  1. Go to Freelancers and select My Freelancers.
  2. Choose Give Bonus in the Actions menu for the contract (or the button on the contract details page).

If you choose to add a bonus to your milestone payment or give a bonus between milestones it will be processed like a bonus on an hourly contract. That means it will be invoiced to your account immediately (making your balance go negative), but be paid as part of the daily batch. All hourly and bonus payments will be charged in a single lump sum to your billing method each day, rather than individually and immediately like the escrowed milestones. The bonus will immediately appear as pending on a freelancer's account and become available after the standard five-day security period.

 

So, if the contract is hourly - just add manual hours; if it's fixed - request payment through a bonus payment.

 

Hope this helps 🙂

 

c000
Active Member
Co v Member Since: Feb 23, 2016
3 of 23
Thanks for the response! That's really helpful. Basically I have to ask the client to add it. Does this mean that Upwork will get a % over the bonus/expense then? That's something we have to calculate in so that the amount I get is actually what I paid for the license. Or perhaps it would make more sense to have the client themselves buy the license and simply forward me the details. Would that be within the policy?
yitwail
Community Guru
John K Member Since: Feb 17, 2015
BEST ANSWER
4 of 23

Co, both methods are permitted, but in the case of a bonus payment, there's still a security period during which the amount of bonus is pending but not available, so if the client needs to have the project completed as soon as possible, then the client should purchase the license then provide it you. Conversely, with bonus payment, the amount would have to be increased to offset the 10% Upwork fee, so the client would also save money by buying the license directly instead of paying you to buy it with a bonus.

__________________________________________________
"No good deed goes unpunished." -- Clare Boothe Luce

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c000
Active Member
Co v Member Since: Feb 23, 2016
5 of 23

Thanks for that!

 

I know what to do now. Both your feedback has been invaluable!

 

 Edit: Invaluable seems ambiguous. Of course I meant that it has been of great value!

vladag
Community Manager
Vladimir G Community Manager Member Since: Oct 31, 2014
6 of 23

Hi Co v,

 

I'd like to reiterate that freelancers should only receive payments through Upwork. Paying and receiving payment outside Upwork is against our policy, and carries a penalty for all parties involved. This policy is there to keep Upwork secure and to protect both freelancers and clients. 

 

We do encourage members to report freelancers or jobs that offer or seek payment outside our system.

 

Untitled
c000
Active Member
Co v Member Since: Feb 23, 2016
7 of 23

 

Thanks. That's very helpful.

prestonhunter
Community Guru
Preston H Member Since: Nov 24, 2014
8 of 23

Depending on the situation, you might not worry about getting a client to pay for expenses.

 

Last month I was working on a project for a client and I could see that I wouldn't be able to work with his data unless I purchased some software. I just bought it with my own money and didn't say anything about it. The software cost $50 but the client paid me a couple thousand dollars. So the cost of the software is just a minor cost of doing business.

 

The software I purchased was generic, not specifically associated with the client's project. He simply needed help with a DBMS that I had not been working with and didn't have current software for.

 

Now... If I needed software for a client's specific project, and I was not willing to absorb the cost myself, then the first thing that I would think of doing would be to explain the need to the client and ask him to buy the software and send me the license. That would be preferable to having to be reimbursed. It absolutely IS POSSIBLE for clients to reimburse contractors for expenses, but Upwork takes a commission on the payments, so I think it is better to get the client to pay for software directly and send the license/software when possible, rather than go the reimbursement route.

3d28c4e3
Active Member
Ivan S Member Since: May 26, 2017
9 of 23

What if the expenses are big? For example for air travel, and international air travel for example?

The problem of getting paid through manual hours or a bonus is that that income becomes taxable income. So it becomes a lot more expensive to get paid this way. Ideally, the client could purchase the tickets but what's been everyone's experience?

petra_r
Community Guru
Petra R Member Since: Aug 3, 2011
10 of 23

@Ivan S wrote:

What if the expenses are big? For example for air travel, and international air travel for example?


 Get the client to book and pay for stuff like that, and I would hazard a guess that very few freelancers on Upwork do much international travel in the course of their contracts.

 

My main contract involves yearly international travel. The client pays for hotel / meals etc directly (to the hotel / restaurants etc) and I get reimbursed for the travel costs via expense payments.

 

It does become taxable income but you can claim it back as a business expense so it makes no difference.

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