What happens to the money I deposit for future milestone payments?

How does milestone funding work?

When you start a fixed-price contract with a freelancer, you’ll need to deposit money into project funds, which are held securely in escrow. You can fund the full contract or just the first milestone (minimum $5.00 USD).

We then hold your funds until the freelancer or agency submits work and you have 14 days to review it. During those 14 days, you can either approve the payment or request changes. If you don’t respond before the deadline, the funds are released automatically to the freelancer.

Why am I charged right after setting up a fixed-price contract?

When you fund a milestone or send an offer for a fixed-price contract, you're charged right away—but the money doesn't go to the freelancer just yet.

Here’s what’s actually happening:

• Your payment is placed in project funds, a secure escrow account where the funds are held until the work is done
• This shows the freelancer that the funds are ready, so they can confidently start the work
• The freelancer only gets paid when they submit the work and you approve it—or automatically after 14 days if no action is taken

So even though you see a charge upfront, you're not paying for work you haven’t received. You're reserving the payment, and still have time to review the work before anything is released.

Note: Your deposit will trigger three transactions on your Reports › Transaction history. There will be one credit and two debits. One of the debits will be for the Contract Initiation Fee.

What happens when I fund a milestone?

Here's the detailed accounting of how the payment is processed:

1. You deposit funds into your Upwork account from your billing method
2. We move that money out of your account into Project funds
3. We deduct applicable fees, such as the Marketplace Fee and the one-time Contract Initiation Fee
4. Once the milestone is submitted and you approve the payment, the funds are deposited back in your Upwork account
5. The money is then sent from your Upwork account to the freelancer or agency

How do I review the funds I've set aside for milestones and payments?

1. In your Transaction history list, find the transaction you want to review
2. Selecting the row takes you to a transaction summary
3. In the description column, under the charge for funding the contract, select the View project funds link
4. The link will take you to the Project funds tab with the filters applied for the specific contract

What happens if a freelancer gives me a refund on a milestone payment?

When you get a refund, those funds are returned to your billing method and deducted from your project funds balance. You’ll see the transaction under your Project funds tab.