How to Pay Contractors in Canada
August 12, 2021
It can seem redundant for companies in the United States to hire contractors in Canada. Why hire from the neighbor to the north when their situation is much like workers in the United States? As it turns out, there are many reasons to hire from Canada’s strong talent pool, and more United States companies are realizing these benefits each year.
The question standing in the way of asking for a Canadian helping hand is often a simple one: how to pay contractors in Canada. There are more barriers than you might imagine through traditional channels, and many small businesses are often unsure of how, exactly, to send funds to Canadian workers.
Here’s a look at why more businesses are hiring from the Great White North, and the methods available to ensure talented Canadian contractors get paid quickly, easily and transparently.
Why hire contractors in Canada?
There are obvious benefits to hiring contractors in Canada—the first being language. English is the prevailing language in North America, and that includes Canada. There’s no language barrier to overcome, which makes it easy to quickly get contractors up to speed on projects. Moreover, it’s easy to work with contractors at a high level, on complex projects not suited for outsourcing to other contractors.
The other major benefit to working with Canadian contractors is the normal flow of work. The biggest time gap you’ll have to deal with at any given time is the difference between east and west coast time zones. That means Canadian contractors are awake and working when you are, and generally at the same point in their day. No trying to coordinate Zoom calls over a nine-hour time difference!
Finally, Canadian contractors are some of the most reputable and skilled in the world. First-world education and access to technology makes the contractor pool in Canada strong and diverse—everything from engineering consultants to marketing specialists. If you’re looking for a specific skillset, you’re more likely to find it (with experience).
Currency and transfer considerations
There’s very little to worry about in the way of currency conversion or exchange considerations when hiring Canadian contractors. The United States Dollar (USD) and the Canadian Dollar (CAD) are one of the strongest currency pairs in the world, which makes changing money simple and low-cost. At any given time, the exchange rate is roughly 1:0.8. While this doesn’t translate directly to a 20% discount on contract work, there is some level of savings.
More important, a majority of Canadian contractors are banked traditionally. This makes everything from funds transfer to landed payments much easier to deal with. For example, someone banking with Toronto-Dominion (TD) Bank will have access to the same resources as an American business paying them.
Ways to pay contractors in Canada
Just because most Canadian contractors have access to traditional banking products doesn’t mean that’s the only way to pay them. In the age of choice, it’s becoming much easier to transfer funds across the border to Canadian contractors in ways that are mutually beneficial. Some of the most common include:
- Wire transfers. Great for instantly transferring funds between banks, this is a costly option that many businesses can’t afford on a regular basis. Their instantaneous and secure nature makes them great for transferring large, lump sums. Reserve these for final payments after a project wraps or for paying high-level consultants and advisors.
- Check or money order. While check or money orders are applicable forms of payment, they’re largely outdated. They take longer than all other forms of payment and lack visibility. Consider them a last resort or applicable for contractors who prefer a traditional paper trail.
- Bank transfer. Bank transfers are among the simplest ways to pay contractors in Canada, and they’re easy for both parties. The problem with them tends to come from sub-par currency exchange rates and fees. That said, they’re a standard for moving money across the border to contractors up north.
- Digital payments. More and more tech-savvy Canadian contractors have turned to digital payments for their convenience and accessibility. Not only can businesses and contractors see the status of funds mid-transfer, currency conversion also happens at prime rates. Moreover, it’s easy for contractors to use their funds as they see fit—withdraw, transfer to a bank, or spend right from a digital wallet.
Breadth of payment options is what makes working with Canadian contractors easy and appealing for many companies. It’s not difficult to find a payment option that works for both parties.
The best way to pay independent contractors in Canada
Despite the many options, digital payments are emerging as the clear option for how to pay contractors in Canada. They offer the quickness and convenience of bank transfers, the transparency of a wire, and the accessibility of traditional banking—all in a convenient digital wallet. As businesses in the United States continue to look north to expand their workforce, digital payments are making it easier to tap into the opportunities offered by Canadian contractors.