Freelancing is amazing. You get to work from anywhere you like, you have your own freedom, you choose your clients, and you can manage your time easily. However, nobody talks about the problems behind the curtains, and one of them is accepting payments from all around the world.
Yes, modern financial services and innovations like SEPA give us the tools to make the process as painless as possible, but you still need to do some research just because it is very easy to fall for the traditional bank trap and a significant portion of your profit evaporates with every transaction.
This is where the SEPA IBAN account comes in handy. This is an account that allows you to enter a fast-processing and highly advanced network reserved for European transfers. Why is this important?
Well, this network will not only allow you to receive money much quicker (in hours instead of days), but also help you cut down costs, and open more job opportunities in Europe.
So, if you are tired of waiting for clients’ payments to clear, losing money on conversions and constantly chasing invoices, this might be the perfect solution that you didn’t know you needed.
What Is a SEPA IBAN Account?
Let’s start from the beginning. SEPA stands for Single Euro Payments Area, which is a system that allows euro payments to move easily between participating European countries. Yes, not every European country is included, but the majority of them are.
IBAN on the other hand, stands for International Bank Account Number, so it’s not a network, but essentially an ID for your bank account. In other words, it is a standardized number that ensures money reaches the right account every time.
SEPA transfers require IBAN in order for transactions to go through. So, if you put them together, you’ve got a tool that lets freelancers receive and send euros (mainly receive) across Europe, as easy as local payments. Transfers arrive the same day, and sometimes within hours, the fees are much lower than what freelancers are used to with SWIFT transfers, and there is no more worrying when the money will arrive.
Why Freelancers Need One
Since freelancers are mainly receiving money, why do they need one? Well, there are a couple of reasons, and if you are a freelancer who has the majority of clients from Europe, you might want to consider this:
SEPA transfers are much quicker than SWIFT or traditional bank transfers. They usually clear within 24 hours, and sometimes instantly. For freelancers, this is a huge bonus since it gives them a better money flow, which is a common issue since they have to pay expenses on time.
Next, we have another important thing – FEES. Traditional bank fees or SWIFT transfer fees can eat a significant portion of your profits. So, if you got paid $300, the traditional banking network will take around $30 to process this transaction. That’s a whopping 10% of your total. That’s why most freelancers wait to pile up some cash before moving it to a bank account.
Fortunately, the SEPA network significantly cuts those fees. So, instead of paying a lot of money, you’ll be paying a few dollars for massive transactions.
Lastly, it opens up more opportunities for you as a freelancer. Why? Well, businesses across Europe want to deal with freelancers who are already on the SEPA network. The process is simpler, the fees are smaller, and the accounting is simplified. So, if you tell a client that you have SEPA network options, they are more likely to choose you.
How It Works in Practice
Let’s make it concrete. Picture a freelance web developer in Amsterdam. They have three clients in France, two in Belgium, and one in Spain. Before SEPA IBAN accounts, every incoming payment came with extra bank fees and delays. Sometimes they’d get paid in euros, but the local bank would convert it to a different currency automatically, eating into the project fee.
With a dedicated SEPA IBAN account, the money lands in euros and stays in euros until the freelancer decides what to do with it. They can pay a European vendor, transfer to another euro account, or convert to their home currency when rates are favorable. Suddenly, running a freelance business across borders is no longer a logistical headache; it’s just business as usual.
Tips for Freelancers Considering a SEPA IBAN
So, what should you do? Of course, the first step is to open up a SEPA IBAN account, but there are a few things to consider.
First of all, keep your SEPA IBAN separate from your personal banking. This makes accounting simpler and gives your business a more professional appearance.
Next, you should check with your bank’s policies. Some banks have limits on incoming or outgoing SEPA transfers (for whatever reason), so make sure the account you choose doesn’t limit your workflow.
You should also consider some multi-currency account features. Yes, the SEPA network deals in euros, but at the same time, you might have clients from other parts of the world, so having a multi-currency bank account is also important.
Lastly, make sure you share the correct IBAN code and show it clearly on invoices, just to make payments seamless.
And that’s it. The process is simple, but it opens up many new opportunities and gives you a chance to save money. So, what are you waiting for? Go ahead and open up your SEPA account.