Paying Outsourcers

That's generally something dictated per the outsourcer.

I pay on a per-completion basis whenever possible. Why give money away when you have nothing to show for it?

Once you are on a schedule with a reliable team or person, then everything can become negotiable.

But in the beginning I would strongly recommend staying away from 100% up front, unless they have a comprehensive portfolio and list of testimonials / clients.

it depends what the freelancer is doing...
I usually put up a small deposit then pay in full after the project is complete.
Or pay in increments.

Whatever works best with you, your freelancer and your budget allows.

It doesn't work both ways unfortunately.

Money is more useful than a single service, as its completely flexible and interchangeable. In most cases, the guy with the cash has the upper hand.

YOU, as the freelancer, have the burden of proving that your work is acceptable to the client, not the other way around.

You can watermark your design, or give samples of the finished project / product in most scenarios. A smart freelancer knows this.

More importantly, for a vast majority of outsourced duties, there are more than enough capable substitutes that will do the same job, for no upfront fee, or a small retainer in good faith.

If you have a well established portfolio or list of active testimonials, than by all means you have every right in the world to demand a larger retainer, or full payment up front. Same is true if you have an established business relationship with said client.

My major issue with choosing a service based business plan, is that ultimately, you are "servicing" others, which often puts them above you. Only until you hit the upper limits of your industry does that change (in most IM related services anyway).

It depends.

I am a virtual assistant. We ask 100% pre-payment on first month.
Once we have good relation with the client we offer them 1 month relief.

Escrow

You have to transfer the cash upfront but they don't have access to it until the job is done.

We are an offshore staff leasing company and we require upfront payment. We have been leasing 90 full time staff now with that kind of payment set up. Yes, it's hard to convince clients to pay you full amount in advance but if you guarantee them that they can get the job they are expected, everything will work out better.

escrow is the way to go for any significant amount of money...no question. For smaller amounts, your fear of the worker bolting is...the cost of doing business...I don't care how good, nice, rich, WHATEVER you are...if you hire enough folks online, this will happen. You can minimize risks, but you can't eliminate them. Proceed with caution, be fair, and you will be fine most of the time.

Mac the Knife

Pay before or pay after but I have only one word: India