
How to pay international contractors: An expert guide
In this ever-growing business landscape, more and more businesses are using independent international contractors with specialist skills. This brings us to our topic for today: How to pay international contractors.
Our guide will provide an overview of why businesses hire international contractors, a step-by-step guide on how to set up payments for international contractors, top tips for building trust and much, much more.
We’ll also explain how the TransferGo Business Account can help simplify the process of paying international overseas contractors from the UK.
Ready to make a start? Let’s go.
Table of Contents
Why businesses hire international contractors
There are many reasons why businesses might decide to hire international contractors. For example, international contractors can:
- Give businesses access to a pool of global talent with specialised skills that may not be available locally
- Save business owners money due to lower rates and different payment expectations
- Help businesses scale faster by giving business owners flexibility to scale labour up or down based on demand
- Provide a fresh perspective and local knowledge, which can be valuable for businesses looking to expand into new markets
- Ensure smooth business operations in overseas markets due to being well-versed in local markets and cultures
- Reduce the overheads that come with full-time employees since overseas contractors don’t require office space and other benefits

Legal and tax considerations when paying contractors abroad
When making international contractor payments, you must be aware of any legal and tax implications associated with both your location and theirs. Every country has distinctive tax requirements and it’s important to comply with them to avoid penalties.
Employment status: Make sure your overseas contractors are correctly classified as contractors, rather than employees. Misclassification can lead to fines, taxes or other liabilities.
Tax withholding: Before you pay, understand the tax structure between your country and the contractor’s country. Many countries require you to withhold a certain percentage of payment for taxes with the withholding rate depending on the country where the contractor is located.
Documentation: Ensure you have proper documentation, like invoices and contracts, to facilitate a smooth tax filing process. Make sure that all contracts clearly detail any payment terms, confidentiality, intellectual property rights and termination clauses to prevent legal disputes later on.
Contractor taxes: International contractors are generally responsible for paying their own taxes in their home country. Your contractor should already be aware of this but it’s worth confirming that managing international contractor taxes is their responsibility.
Professional advice: Businesses may find it worthwhile to work with an international tax consultant or legal advisor to help them navigate the complex laws and regulations associated with hiring international contractors.
Popular payment methods for paying international contractors
There are many ways to pay your international contractors from the UK. Find out about some of the methods available from the list below:
- Online payment platforms: Online payment platforms like the TransferGo Business Account ensure fast, affordable and reliable international payments to over 60 countries in over 35 currencies. (It’s free to sign up with no monthly fees).
- Bank transfers: Many businesses organise bank transfers to pay their international contractors. However, fees can be high and payments can be slow.
- Cheques: Cheques are becoming increasingly outdated among modern business set-ups but some companies still use them. Be warned though: they’re not great for cash flow.
Choosing the right payment platform to pay international contractors
When it comes to selecting the right payment platform for paying your international contractors, consider fees, speed, accessibility and currency conversion costs. Some of the specific considerations to keep in mind include:
- Destination markets and currencies. Does your chosen platform support your contractor’s currency and country?
- The fees associated with your chosen platform. Will it be cost-effective for you?
- Safety and security. Will your transactions be secure? Make sure your chosen platform has robust security protocols to keep your money and data safe
- Currency exchange rates. Are they favourable? Are conversion fees included?
- Digital features that come with the right payment platform. Is there an app available with your chosen platform? Will you be able to make 24/7 payments from different locations?
Step-by-step guide to setting up payments for international contractors
Setting up payments for international contractors doesn’t need to be complicated. Here’s a step-by-step guide:
- Outline your payment terms and your contractor’s currency preferences
- Choose the best payment method based on fees, speed, accessibility and convenience
- Set up an account with your chosen payment method, providing important business and contractor details
- Confirm all of the details with your contractor including account details, payment method and payment schedules
- Make the payment once all details have been confirmed. You may need to convert the payment to the contractor’s local currency
- Confirm receipt. Once you’ve made your payment, check whether the contractor has received it (the TransferGo Business Account offers easy tracking to give you full visibility and control over your payments)
How to handle currency exchange rates
Fluctuations in exchange rates can impact the total amount received by the contractor. To avoid such currency exchange issues, you must:
- Have a clear understanding of how currency exchange and market fluctuations work
- Choose a payment platform with industry-leading currency exchange rates (like TransferGo, for example)
- Consider currency conversion fees—if you decide to use bank transfer as your payment method, beware of high conversion fees
- Monitor exchange rates regularly to avoid any surprises
- Communicate with your contractor about how any exchange rate fluctuations may affect payments

Managing payment fees for international transfers
If you’re dealing with multiple international contractors and/or make frequent payments abroad, transfer fees can add up. You can avoid high transfer fees by:
- Choosing low-fee payment platforms that offer competitive rates for currency conversion for contractors—for example, TransferGo charge no fees on major routes
- Making batch payments to streamline your international contractor payments process
- Considering paying international contractors in their local currency to avoid or reduce your conversion fees
Ensuring compliance with local laws and regulations
International payment solutions require you to be aware of regulatory requirements to ensure secure payments to international contractors.
In order to ensure compliance, you should have a clear understanding of different tax withholding rules of different countries and pay accordingly. It’s also crucial to stay up-to-date with labour laws that cover minimum wages, working hours and other labour requirements. To avoid any issues in the future, always maintain a detailed record of cross-border payments for tax and audit purposes.
Tips for building trust through efficient payments
Building trust with contractors is a long process and efficient payments play a major role. Here’s how to build trust through efficient payments:
- Always make the correct payments on time. You can also opt for contractor payment automation to simplify the process
- Set clear payment terms like amounts, payment schedules and payment methods in advance
- Always use reliable, secure and efficient payment methods to ensure payments reach their destination on time
Common challenges and how to overcome them
When paying international contractors, it’s not unusual to encounter challenges. But they’re easy to overcome if you follow the right steps. Here are some examples of common challenges and how to overcome them:
- Delays in payments: Choose a platform that promises realistic payment deadlines. TransferGo has a 97%+ faster-than-promised delivery rate to give you total peace of mind
- High transaction fees and currency exchange rates: TransferGo offers industry-leading exchange rates and charges zero fees on major routes
- Payment disputes: Always stick to the payment terms and schedules, making sure that your contractors are paid correctly and on time. Oh, and make sure they understand the payment process and schedule way in advance
Now that you know how to pay international contractors, why not consider signing up for a TransferGo Business Account? It’s free to sign up and there are no monthly fees. Once you’re all set up, you can make low-priced payments in over 35 currencies to more than 60 countries with payments typically reaching their destination in under 30 minutes.
Plus, TransferGo has a top-notch customer support team that speaks 9 languages and addresses 80% of enquiries within just 2 hours. It’s no wonder we have a 4.7/5 average rating on Trustpilot and 40% of users come to our platform from word-of-mouth recommendations!
Are you ready to streamline your supplier payments with a TransferGo Business Account? Sign up for TransferGo today!
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