“What exactly is escrow and why is it important to EngLancer?”

This question came up during a recent meeting with a marketing contact of ours. Phil, our CTO, explained the first part:

“It’s like if two guys place a bet and a third, trustworthy party, holds their money to the end of the game to save any arguments.”

Phil’s analogy is so apt (and so worthy of being developed into a full blown blog) because it highlights the key purpose of using an escrow payment mechanism. Essentially, it enforces trust between two parties. Essentially, escrow is the deposit of funds by one party for the delivery to another upon the fruition of a particular result.

This is how EngLancer works.

Lower Your Risks, Up Your Profits

For most smaller companies, running and interpreting credit checks is a hefty expense, in terms of both time and money.

And you should bear in mind, that big job from a client nobody else wants could in fact be the Big Break your business needs… if you get paid, that is.

Tough call, though. How do you decide which jobs to turn down and which to accept?

It all comes down to finding a way to effectively manage the business risk. That’s what we at EngLancer are trying to do.

By using escrow, you, as freelancer or outsourcer, can set the terms of payment in a way that is 100% enforceable.

Whether it’s for a new customer, or a much larger amount than you’ve delivered in the past, you can use our platform to manage (or totally mitigate) your company’s risk of late or none payment.

Pay For Results

“So everything’s stacked in favour of the freelancer, then? And I’m paying upfront.”

A reaction I heard from a client looking to outsource through our platform.

Well, not really.

The fee is held by EngLancer and isn’t released until the work is approved.

By you. 

Which means you’re not paying for the service until you’re completely happy with it, offering a level of protection against poor quality work or delivery.

And look at it this way, do you really want to be hassled by people chasing invoices and putting your credit rating at risk for work that doesn’t warrant payment?

Trust is again the key. Of course, we all know trust takes years to develop. But with the on-going, ever-increasing demand for instant results within our industry, there is little time to build such relationships.

Escrow provides an effective mechanism for artificially creating and enforcing what we mean by “trust” between client and subcontractor.

Get the Best Guy, Dedicated to Your Job

That said, the means to enforce quality of work isn’t the benefit of escrow we like to outline to our clients.

I hear all the time that it’s getting harder and harder for companies to find the engineers and draftsmen they need to deliver on projects they’ve already won. Thus, finding those people is bound to give a competitive advantage over the engineers next door.

The question that follows then:

“How can a company ensure they get the best people for their projects? How can a client prove to a subcontractor how much they want them to be part of a project?”

Not to mention, you want a subcontractor dedicated to delivering your job, not the jobs of five other companies at once.

(Apologies for the long set up but the point I’m trying to make is that, because the payment is secured, the client is able to demonstrate intent. I’ve done it myself as a small company. Admit it, when a job comes in for the client who always pays early, you prioritise them over ‘The Guy You’re Always Chasing’. Of course you do, how could you not?)

My sales pitch is simple, if you’re a client reading this, you need to think how important is it to you that delivery of your job is prioritised.

You should be asking yourself, why should the smaller company or freelancer turn down smaller or safer items of work and book large portions of capacity – and potential earnings – for you?

Good Business, Nothing Personal

A company who’s dead set against any sort of escrow or split payment has the right to be, of course. I know if I had a perfect track record of paying my subcontractors on time, I’d be a little – no, a lot – offended if someone turned around and said, “I want payment upfront this time.

I could empathise, however, if I were approaching the guy who’s done a few £100 jobs for me and now I’m asking for a £5000 project, prioritised. After all, everyone has to manage their exposure and risk.

And if you are that great client, EngLancer puts you in a better position to derive a competitive advantage from your behaviour.

That is, if the freelancer can see at a glance that you’ve paid your last 50 jobs on time, with values ranging from £100’s into the £1000’s, with little to no dispute, s/he will be:

  • Keen to secure you as a client; and
  • More willing to consider variations and amendments to the amount of money held in escrow for each of the deliverables agreed.

So you could, if you really wanted to, place a £5000 project on our platform with the full amount held in escrow (and effectively out of your business’ cash flow). Or, you could break the task into 10 pieces of work each worth £500, lessening both the impact to your finances and the risk that the subcontractor won’t deliver.

Trust and risk management. These are key to the EngLancer philosophy.


We also view the escrow mechanism as an incredibly useful project management tool.

As we’ve discussed already, the key to success for any engineering outsourcing is the ability to effectively scope the work required.

We’ve found that enforcing a project “gate” (a point where both parties stop and make sure everything is clear) is a supremely effective means of avoiding any miscommunication, the risk of scope creep and the impacts of poor performance.

To put it simply, the act of depositing money ensures that both sides pay a lot more attention to making sure they get this right, which leads to better projects going forward. 

Projects that are helping us to convince both companies and freelancers to join us in re-engineering the way we engineer.

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