The United States’ neighbor to the south, Mexico tends to be overlooked when the conversation turns to skilled, affordable contractors. The fact is, Mexico is rapidly establishing a name for itself in the global contractor marketplace. Not only is this country home to well-educated, capable professionals, it’s also a destination for skilled ex-pats and international globetrotters. These individuals need work, and they’re turning to freelancing to find it. The only question is, how do you pay contractors in Mexico?
Sending money to Mexican contractors is easier than most businesses realize. While it’s not as simple as running payroll for your domestic W-2 employees, there are more than a few ways to make sure skilled contractors south of the border get paid on-time, in-full and without obstacles.
Here’s a look at what it means to work with contractors in Mexico and how to best compensate them for their contribution to your company’s growth.
Why hire contractors in Mexico?
Hiring contractors in Mexico comes with several key benefits. Not only is it a global hub for talent, it’s one that’s close to home, in the same hemisphere for United States companies. As a result, it’s a lot easier to stay on the same page with Mexican contractors.
While just under 12% of the total population in Mexico speaks conversational English, those groups are consolidated in Mexico’s major business hubs. That means reliable internet access and cell reception, as well as access to resources that other international contractors may not have readily available to them.
One of the major benefits of working with contractors in Mexico is that your money will go further. The cost of living in Mexico is roughly 65% of that in the United States. As a result, companies can prospect top-tier talent living in Mexico at roughly two thirds the price of similar domestic talent. It’s a win-win for companies and contractors alike.
Finally, working in the same region of the world often makes sense for companies. Mexico shares the same working hours as the United States, which means you can expect regular communication with contractors during waking hours. This is essential for projects that require attentive communication in real-time.
Currency and transfer considerations
Paying contractors in Mexico is simple, and there are plenty of options available to companies seeking to send funds south of the border. The biggest consideration is currency. Do they want to be paid in U.S. Dollars (USD) or Mexican Pesos (MXN)? Currency conversion comes into play often, which can end up costing companies more than anticipated to send funds across borders.
Traditionally banked contractors in Mexico will likely want funds in Mexican Pesos, for simplicity. However, the USD has about 20 times the purchasing power of the MXN, which can lead some contractors to prefer their landed payment in USD. It’s important to work this out ahead of time, to determine the best mode of payment.
Ways to pay contractors in Mexico
If you’ve made the decision to work with contractors in Mexico, one of the first things you’ll need to figure out is how to pay them. Moving money across borders is easier than it used to be, but there are still factors that can influence mode of payment, such as currency preference, frequency of payments and more. Here are some of the more common payment rails to consider:
- Wire transfer. While they come at a hefty cost for senders and sometimes receivers, wire transfers are unbeatably fast and highly secure. They’re a great option for sending lump sums and one-time payments with confidence.
- Check or money order. While they’re not usually applicable for most international contractors, money orders still have a place among Mexican contractors—especially those located outside urban areas. In most cases, however, they’re obsolete.
- Bank transfer. Bank transfers are simple, but not always convenient. Bank currency conversion rates are often obfuscated, and there’s a chance they may put a hold on funds or even return them, simply because the transaction is an international one.
- Digital payments. Once payer and payee open up digital wallets, there’s nothing stopping a simple and transparent transfer of funds! Digital payments are simple, affordable and broadly applicable, making them a preferred option.
While there are few barriers to paying contractors in Mexico, some modes of payment are still better than others. It all comes down to the situation at-hand. Consider the variables at play and choose a mode of payment that works for both company and contractor.
The best way to pay independent contractors in Mexico
The best way to compensate contractors in Mexico is through a strategy that ensures they’re paid on-time, in-full, without barriers. The key to retaining great talent is trust, and much of that trust comes from fulfilling on your promise to pay for the work you’re getting! Finding a reliable, convenient mode of payment for the contractors you’re working with goes a long way in preserving that relationship.
Want to make it even simpler? Veem can show you how. Learn how to leverage digital payments into an asset for your business: one that helps you pay contractors in Mexico without hassle.
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