How to pay International Contractors - 5 Best ways

May 20th, 2022 by Felix Cheruiyot

pay International Contractors

IntaSend provides a reliable way for businesses to pay international contractors and freelancers. For your contractors, nothing is more important than receiving their payments on time.

Just because someone's based overseas doesn't mean they can wait any longer than a contractor who lives down the street from you.

It's a good idea to come to an agreement with your contractor on the terms of payment before work begins. This typically includes the agreed-upon rate and any other details about the project or work that needs to be done. You could charge by the hour or by the project.

In this post, we’ll be discussing exactly who an international contractor is, the benefits of hiring them, and things you should consider before deciding on a payment method. We’ll also mention some mistakes to be on the lookout for before going on to talk about how to pay international contractors.

What Are International Contractors?

Simply put, an international contractor lives in your target market (say, India) and works for your US-based company. This relationship is defined by a contract, not a workforce agreement.

Types of international contractors:

You can find and hire a contractor via face-to-face meetings, online job sites, and umbrella companies. Below we’ve listed the types of international contractors you can look into while making the decision to outsource:

Why Hire International Contractors

There are many reasons why you might want to consider engaging international contractors. Check out some potential advantages below:

Adaptability

According to general contract law, your business and the contractor are in a contractual relationship. If the parties are allowed to determine the nature of their relationship, making an agent out of a contractor would be easy. There are numerous laws relating to false advertising, contracts, errors, and undue influence.

Cost

Contractors typically do not have the same set of rights as employees. Business owners, for example, may not be required to pay medical insurance commitments, accident insurance, or parental and sick leave. Furthermore, the minimum salary may not apply to your services.

Ease of compliance

Due to the fact that independent contractors are subject to many fewer regulations and laws as opposed to employees, it may be easier to ensure you are compliant with the laws in that country.

Things To Consider Before Deciding How To Pay International Contractors

There are a few things you need to pay special attention to when deciding on how to pay international contractors. Check out some of the crucial details you need to pay attention to:

Mistakes To Avoid While Hiring International Contractors

While hiring your team internationally has many upsides, there are a few things you need to keep in mind so as to avoid making any mistakes. We have put together a list of the six most common compliance mistakes when hiring internationally.

Misclassifying Your Worker’s Employment Status

Oftentimes, employers who hire workers abroad prefer to treat them as independent contractors so that they do not need to comply with the requirements of employment laws. This is possible, especially for short-term work, but keep in mind that your contractor may actually be classified as a formal employee under local criteria.

Violating The Host Country’s Employment And Contract Laws

Employment and labor laws vary from country to country, which may be more or less restrictive than in your home country. There are many examples of how these requirements can be implemented, such as termination notice periods, compliant employment contracts, overly restrictive non-competition clauses, and other rules designed to protect employees.

Your knowledge of the specific employment regulations is important since the local employee would be favored in any dispute or claim.

Not Offering Statutory Entitlements And Benefits

Legislative entitlements and benefits can vary considerably between countries and, at times, can create a significant proportion of the overall compensation costs. In the case of countries with social structures based on the provision of benefits and entitlements by employers, these costs cannot be avoided.

The benefits you are accustomed to, such as health coverage and vacation leave, might surprise you, as may mandatory pension contributions and extended maternity leave.

The Five Best Ways On How To Pay International Contractors

The best way for you to pay your international contractors depends on the type of business you're running and the kind of contractor you've hired. We’ve listed five ways you can choose to pay your international contractors. While some of these might be common, we would like to share what we have been doing at IntaSend and how we enable businesses to pay their remote workers.

IntaSend

Created by IntaSend Solutions Limited, IntaSend has been built from the ground up to enable payments for remote workers, creators, and international contractors.

We provide mass payouts to your contractors anywhere in Africa, India, Pakistan, and Indonesia. Your contractors can also accept online payments using IntaSend’s advanced no-code payment links or easy-to-use payment API as a firm. The platform is integrated with Visa, MasterCard, BitCoin, ACH, and M-Pesa.

IntaSend for businesses

IntaSend RemotePay provides a mass payout option for remote payrolls. We make it possible for your business to pay contractors in 50 countries in Africa, India, Pakistan, and Indonesia. RemotePay supports instant bank transfers and mobile money disbursement. With the remote pay product, you are able to add your beneficiaries and reuse the data for future payments. We also provide crossborder payments APIs for you to automate your payouts process.

How to start

IntaSend for freelancers

The contractor is able to initiate the payment request through the invoicing platform and payment link. With this option, the employer does not need to signup. During payouts, the contractor must generate an invoice for the employer to act on it.

Here's how it works:

Some features of IntaSend that are worth looking into are:

Why IntaSend Payment

Although it is a burgeoning online payment platform in Africa, IntaSend has already secured over 1000 freelancers and small businesses. The list of our loyal clients includes EssayHero, Radio Active Tutors, yTask, and Bosky Safaris.

IntaSend not only provides mass payouts for cross-border payment, but we also provide many ways for businesses to get paid. This includes bank transfers, mobile money, and crypto-payments where applicable.

We work with partners that enable us to payout to all countries in Africa and 5 countries in Asia. We are on track to supporting over 130 countries by the end of 2022.

We use real-time exchange rates and as a result, we are able to offer feasible and competitive rates. We are able to disburse to banks and mobile money to ensure instant payouts and easy access to funds.

International Wire Transfer

Probably the most common way to pay international contractors is with a wire transfer.

A wire transfer is generally sent from your bank account to the beneficiary's bank account via SWIFT - an international banking network that is complex and mightily expensive to use.

Despite their name, SWIFT transfers are not always the fastest ways to transfer money.

In addition to countless intermediary banks getting involved with your transfer, depending on the route the money has to take to reach its destination, you may also have to pay fees for each of them.

The point that needs to be taken into account when you're choosing how to handle international contractor payments is that even though wire transfers are a popular way to send money, that doesn't always mean that the prices are going to be fair.

International Money Order For Paying International Contractors

International money orders are another established method of international payment. One can be purchased at various locations, including post offices, by paying the amount you intend to send along with a fee.

After receiving the order, you will need to send it via postal mail - yes, the old-fashioned kind - to your contractor, and he or she will determine how to deposit the funds once they arrive.

Employer Of Record (EOR)

For companies hiring foreign employees, an employer of record handles all payroll compliance, paperwork, and legal paperwork. And that's not all. Additionally, an international employment representative provides onboarding and training services tailored to the individual organization.

Moreover, localized employee benefits and in-depth support help build a positive international employee experience. Especially in a post-pandemic world, 92% of employers believe that enhancing the employee experience is their top priority.

Paper Checks

If you want to send your contractor a check, you can use your business account. For international contractors, checks are not a popular option because of bank fees, exchange rate fluctuations, and funds are held until the check clears.

How To Stay Compliant When Hiring For Overseas

Below are a few tried and tested methods for avoiding compliance issues. We’ve listed them below to save you the time and energy of researching these on your own. Check out these three methods you must adopt.

Incorporating Local Entities

Depending on the business plans that your company has in a country, you may wish to establish your own corporation instead of just hiring remote workers.

The legal and accounting specialists would have to be hired, and the payroll may be outsourced. Still, it is a viable option if you hire employees in one location simultaneously.

Use A Third-party Business Partner

Those businesses that already conduct business overseas may have vendors/suppliers willing to put your local employees on their payrolls if yours does the same. You're relying on another company to handle compliant employment for your employees, so this would be a good interim solution for you.

Use An Employer Record Solution (EOR)

Another option is to use a GEO local 'employer of record' in the host country, which is already set up and ready to process payroll for any number of employees. There are numerous advantages to using an employer of record over other methods:

Pay Your Contractors With IntaSend

Technological advancements have made it easy to hire and manage international contractors across the globe. It's even become super simple to disburse payments to your team irrespective of where they live. IntaSend is quickly becoming Africa’s go-to online payment platform for all your contracting needs. Our services come highly recommended if you're looking for ways how to pay international contractors.

Some of the products we provide include business accounts, business payments, and wallets.

Want to learn more about the more straightforward way to pay your workers overseas? Book a demo with us today!

FAQs

How much tax do contractors pay in Kenya?

Independent contractors are taxed under the withholding tax regime that determines how they’re taxed. Typically it stands at 3% for contractors and 5% for professionals and consultants.

How much is a freelancer paid in Kenya?

Freelancers typically make somewhere between KES 32,000–40,000/ month.

How can a freelancer make money in Nigeria?

You can use the IntaSend platform to disburse payments to your international contractors. By signing up, you can leverage our business solutions, wallets, and business account features.


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