Freelancers Should Avoid Check Payments - 3 Reasons to Say No

14 March 2011
Of the many payment options, getting paid by check is one that freelancers should avoid. It's rarely a win-win situation for both parties and must only be used as a last resort. Based on experience, there are 3 obvious reasons that you should not agree to being paid by check.

Freelancers should avoid check payments because:

1. The check could get lost in the mail. The lack of speed is a given in most of the Philippines postal services. A far more notorious variable is that the check could get intercepted by people with evil intent. Your hard-earned money might not reach your end at all.

2. Check processing takes time. Locally issued checks by Philippine banks take an average of 2 or 3 banking days to clear. Checks issued by banks outside of the country have longer processing times. You  normally have to wait for 30 business days (or over a month) for check clearance and processing. Furthermore, the check must be presented at the bank no later than 11 a.m. for the transaction to be counted for that day. The option takes away your privilege of speedy remuneration.

3. You will lose a significant amount of money on the charges. Banks call the fees as "processing charge, service fee, or pouch money." No matter what they're called, money lost is money wasted. I've had my share of being burdened by bank fees. It just doesn't make sense to me that I would be charged for actually putting money in a bank! Do the math and you'll never want to get paid in check again.:

  • Depositing a locally issued check to a bank different from yours may entail a bank service charge. It could be anywhere from free to a meager P10 and an exorbitant P150. So far, I have not noticed any deductions made by Unionbank or BPI for depositing checks issued by Metrobank. Make sure you check with your bank though, as I could be wrong.

  • Depositing an internationally issued check to a local bank will entail at least 2 types of fees (based on my dealings with BPI): a "pouch money" fee currently set at $25 and a bank processing fee of P150. Double ouch!

  • Encashing a locally issued check at the same bank but the non-check-issuing branch will incur another fee, which I find absurd. It seems that P150 to P300 is the standard, as was the case with my Equitable Bank (now BDO) transaction.

  • Encashing an internationally issued check will put you at the mercy of the bank's not-so-good exchange rate conversion. You will lose a significant amount when you are encashing a very huge check. If only money changers could do check encashing, then I'd run to them first instead of my bank.

When you agree to be paid in check, you agree to be on the losing end. Take one last look at this bank check and be prepared to study other pocket-friendlier options. PayPal is one, and in the coming days I shall discuss the better payment processing options for freelancers.

bank check photo
    Bank checks are not freelancer-friendly. They take time to process and incur unwelcome bank charges.
   (photo credit: Modern Mechanix)
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