| Pages in topic: [1 2] > | How big of a problem are long payment terms? Thread poster: Henry Dotterer
|
|---|
Hi folks. A question. We often hear about payment periods of 30, 45 or 60 days after job date, or delivery of work. At the same time, many clients pay faster.
What is your experience? How much does it matter to you how fast the client pays?
| | | | Dan Lucas 
United Kingdom
Local time: 16:00
Member (2014)
Japanese to English
| Important as a signal | Mar 11, 2020 |
Typically my clients pay me 30 days after the end of the month in which the job was delivered, so effectively up to 60 days after delivery. In some cases (mostly European clients) it's 30 or 45 days after the date of invoice.
I would not consider anything beyond that for new clients, basically because it suggests to me that the client isn't dealing fairly with its suppliers OR that it isn't well-capitalised. I don't want to get involved with such companies. So in that sense payment ... See more Typically my clients pay me 30 days after the end of the month in which the job was delivered, so effectively up to 60 days after delivery. In some cases (mostly European clients) it's 30 or 45 days after the date of invoice.
I would not consider anything beyond that for new clients, basically because it suggests to me that the client isn't dealing fairly with its suppliers OR that it isn't well-capitalised. I don't want to get involved with such companies. So in that sense payment terms do matter. If a prospective client said "60 days after the end of the month of delivery" I would almost certainly decline to work with them.
When I am extremely busy (typically this is a seasonal issue) and trying to stuff jobs into a 16-hour day, I couldn't care less about how long it takes to get paid because I have a constant stream of income coming in from previous jobs. And I'm too busy to check my bank balance.
When business is slow and the income stream gets lumpy I pay more attention to payment terms, but it doesn't actually mean that anything changes - after all, I have already agreed to the terms. It's not as if I can just ignore the agreement I signed and demand that my client pays me in 10 days rather than 30.
Having said that, one occasional Italian client of mine has just effectively used coronavirus as a reason for invoking the force majeure clause in its contract, unilaterally declaring that invoices will be paid 30 days later than usual. That would be a significant hit for somebody who does a lot of business with them. I'm very much hoping that my clients will not follow suit.
Regards,
Dan ▲ Collapse
| | | | Joakim Braun
Sweden
Local time: 17:00
German to Swedish
+ ...
With negligible inflation, it doesn't matter much at all unless you're dependent on near-term cash flow.
However, you may find that clients with good rates pay in 30 days, while clients with not-so-good rates want you to wait for their bad rates...
| | | | | Up to EOM + 45 days not a problem | Mar 11, 2020 |
60 days is the legal maximum in the EU, but as Dan, I avoid those who insist on 60 days (in addition to EOM), as it's my experience that they are the ones that pay late and cause trouble. If 45 days is not enough, it's a sign of poor management, poor cash flow or other problems. I don't want the hassle of chasing up late payers, so I try to avoid them up front, using the Blue Board, Payment Practices and whatever indices I can find.
With a credit card, one can also postpone a part o... See more 60 days is the legal maximum in the EU, but as Dan, I avoid those who insist on 60 days (in addition to EOM), as it's my experience that they are the ones that pay late and cause trouble. If 45 days is not enough, it's a sign of poor management, poor cash flow or other problems. I don't want the hassle of chasing up late payers, so I try to avoid them up front, using the Blue Board, Payment Practices and whatever indices I can find.
With a credit card, one can also postpone a part of one's ongoing expenses up to 45 days (and even get paid for it) – if one is disciplined enough to pay it out in full every month. And one should maintain a financial buffer if at all possible.
It would be great, by the way, if Proz could negotiate a deal with an international credit rating agency such as D&B and somehow provide access to Plus members. I don't know if it's doable and affordable, but it's difficult for small businesses like us to get affordable access directly, as their deals are geared to large organisations. That's something that would make me want to become a Plus member if I wasn't already. ▲ Collapse
| | |
|
|
|
| Something to consider | Mar 12, 2020 |
Terms of payment are always something to be kept in mind for reasons of cash flow. Although doing massive and well paying jobs is very attractive, their downside can be the fact that you don't get paid for a couple of months. Thus, it is important to not put all your eggs in one basket.
| | | | | Words from our esteemed colleague | Mar 12, 2020 |
Our esteemed colleague, the late José Henrique Lamensdorf wrote about payment terms several times on the forums.
By doing a quick search, this came up:
https://www.proz.com/forum/translation_project_vendor_management/327712-payment_terms.html#2744612
It starts out with this:
Extended payment terms are e ... See more Our esteemed colleague, the late José Henrique Lamensdorf wrote about payment terms several times on the forums.
By doing a quick search, this came up:
https://www.proz.com/forum/translation_project_vendor_management/327712-payment_terms.html#2744612
It starts out with this:
Extended payment terms are equivalent to the seller/translator granting the buyer/client a loan for that payment term. Those selling merchandise equally bought on extended term credit can pass-through that loan, embedding its interest in the price. Those providing personal services can't, as the translation chain of supply starts with them.
Interest rates vary from one country to another. While MONTHLY interest rates in North America and the Euro Zone are a fraction of 1%, they reach two-digit integers in countries like Brazil and Argentina, for example.
There is more in this post, and here is another thread where he made several posts:
https://www.proz.com/forum/money_matters/328481-delayed_payment_why_not_pay_at_once-page2.html#2750279
He wrote somewhere jokingly that he made a pact with the banks that he is not going to compete with them in their industry (i.e. he is not extending loans) and in exchange the banks promised not to compete with him on translation.
Jokes aside, there is a very real issue of long payment terms: they have material consequences, and depending on the country, the volatility of the financial markets, exchange rates, etc. those consequences can result in severe losses for the translator.
[Edited at 2020-03-12 01:56 GMT] ▲ Collapse
| | | | | Reasonable approach is a short payment term | Mar 12, 2020 |
Henry Dotterer wrote:
Hi folks. A question. We often hear about payment periods of 30, 45 or 60 days after job date, or delivery of work. At the same time, many clients pay faster.
What is your experience? How much does it matter to you how fast the client pays?
From:
https://wiki.proz.com/wiki/index.php/Determining_your_rates_and_fees_as_a_translator
But these agency standards are widely discussed and disputed among professionals. Some of them point out that a translator can provide better results when concentrating on his/her skills best, not trying to develop another business - a translator is not a bank and should be therefore not treated as a money lender. Or as a professional offering freebies. Upon negotiations with direct clients it's not uncommon to negotiate upfront payment or payment in advance - this can be a full payment in total or milestones payment when dealing with a larger text. Of course, in order to process a translation order with upfront payment accordingly, the translation client should check the business practices of the translator. Checking the feedback like the LWA entries on ProZ or the recommendations on other networking platforms can help, although - just like translators back-checking the business practices of their clients - the client should while checking not forget to take a look at the feedback granters. Reliable companies among such feedback entries might help in order to get some reassurance about the professionalism and reliability of the language service provider.
----------
My take on this:
Problem: Often, certain agencies see this as follows: We are going to get the translation from the translator, then give it to our client and wait - 30 or more days - and then pay the translator. And when 30 days go by and the translator is still waiting, the agency might say - "real sorry, but we haven't gotten paid ourselves." There's no way for the translator to check if that's true.
This is based on a completely wrong assumption that there is an indirect business relationship between the translator and the end client with the agency as a middleman.
Unfortunately, many translators have accepted this wrong assumption.
Correct approach is this: An agency should not order a translation if they cannot pay the translator by the time negotiated with the translator. It's none of our concern when the agency gets paid by their client. And what should that time be?
Most agencies expect the translator to work as quickly as possible. Even rush the translations.
So, often, 5000 words are to be delivered within a few days. Over the internet. Ready to be used by the client.
It needs to be paid then. Why would you extend payment to 30 days? For a product you provided over the internet. It's not a standard I agree to. I am not a bank and I can't visit my client at home to ask for the money nor am I willing and able (financially) to employ a collection agency or sue my client for the money.
We all depend on quick payment.
Often, we experience waiting periods (shorter and longer ones) between orders and we then especially depend on having money available for living expenses.
But most of all, we do business over the internet. We should not extend credit for 30 days or more. We provide a product that is ready to be used. When it is delivered, it should be paid. Reasonable grace periods are 7-14 business days. But for new clients, immediate payment or upfront payment is often required.
30 day- or monthly payments for large or repeat projects should be accepted from trusted sources only. But in many cases, upfront payments or incremental payments will have to be made for large projects. It is for example also customary to get 50% paid upfront for book translations and the rest when you deliver the translation. 45, 60 or more days of extended credit and waiting for your money? Who knows if your client is still going to be able to pay you. They might have paid someone else who didn't want to wait or they might have gone bankrupt. Due diligence before working with anyone is very important as well, always.
As far as direct clients are concerned, individuals and even companies pay up front or immediately upon delivery. I make exceptions for trusted sources only, but it's not the norm.
Not following these practices will open you up to non-payment from sources you can't trust.
If a client can't accept reasonable payment terms for a product bought over the internet (and you know that whatever else you buy over the internet you can't buy without paying first), it's much safer not to work with them. It's not worth the headache. And clients who demand from the outset how much they want to pay and when - well, it's just out of the question.
[Edited at 2020-03-12 03:07 GMT]
| | | | | Month after invoice month | Mar 12, 2020 |
I expect clients to pay me by the end of the month following the invoice month, and I send the invoice once delivery of the job has been confirmed. This means that, like Dan's, my payment interval is 30-60 days, though some clients pay faster than requested. This is easy to keep track of and takes account of the fact that some clients have a payment round at the end of every month.
Anybody who will not accept these reasonable terms is not going to be a client of mine.
| | |
|
|
|
DZiW (X)
Ukraine
English to Russian
+ ...
| Fear of loss -vs- Exposing to unnecessary risks | Mar 12, 2020 |
As far as I work with direct clients only, I don’t have such troubles for they pay me in advance, right after the job’s done, or within a few business days.
Reading and talking to many different freelancers, I came to an unpleasant conclusion that rather many intermediaries and sponges—even when paid in advance—deliberately abuse the accrued debt trick to tether their translators, giving them more unpaid jobs and pressing them further. If one agreed to unfavorable ... See more As far as I work with direct clients only, I don’t have such troubles for they pay me in advance, right after the job’s done, or within a few business days.
Reading and talking to many different freelancers, I came to an unpleasant conclusion that rather many intermediaries and sponges—even when paid in advance—deliberately abuse the accrued debt trick to tether their translators, giving them more unpaid jobs and pressing them further. If one agreed to unfavorable terms, he is but a cashcow silent and disposable needy to fleece. Or as one agency owner nicely called them ‘patients’: Why, if one can wait for 40 days, he surely can afford waiting for 60+ days, and those who can wait 60+ days...
Perhaps such oppressed freelancers really believe they are special (in a way). No prob.
The problem point is the vast majority of translators are poor businesspersons easily tricked into shady deals with imposed ‘standards’. Certainly, self-education and common sense comes to the rescue.
While spongers are often considered as parasites for a reason, they call it ‘business only’ and ‘life/biz coaching fee’. And that’s ok too. ▲ Collapse
| | | | | 30-60 days no problem | Mar 12, 2020 |
DZiW wrote:
As far as I work with direct clients only, I don’t have such troubles for they pay me in advance, right after the job’s done, or within a few business days.
Lucky you, Dizzy. I wish I lived in your fantasy world. I work for very reputable direct clients and they pay at 30 days like pretty much everyone else. So don’t blame my biz skills; a monthly payment cycle is fairly standard.
Henry, long payment terms are never really a problem. It’s non-payment that’s the issue. As Thomas said, maybe ProZ could help with credit checks. (Though common sense goes a long way...)
| | | | DZiW (X)
Ukraine
English to Russian
+ ...
| Not lucky, but sensible | Mar 12, 2020 |
Thank you, dear Chissy. I happen to encounter very many different people, including sad, under-educated, lazy, arrogant, and greedy persons, but none of them was envious to be paid much later than sooner--no exceptions. How come, except for Rapunzel and heartsick stories? I can think of no alternative, unless one is a dire asocial hikikomori and no businessperson.
Of course, there're a lot of reputable clients and companies paying bi/weekly, monthly, or by pieces and other me... See more Thank you, dear Chissy. I happen to encounter very many different people, including sad, under-educated, lazy, arrogant, and greedy persons, but none of them was envious to be paid much later than sooner--no exceptions. How come, except for Rapunzel and heartsick stories? I can think of no alternative, unless one is a dire asocial hikikomori and no businessperson.
Of course, there're a lot of reputable clients and companies paying bi/weekly, monthly, or by pieces and other methods, why? While a common employee must stick to the company rules, a clever free*lancer is usually free* to choose and negotiate what is best for him--and very his business. So...
No crying after you have specified your* terms and signed the contract--on your terms, right?
Although, it's not the case when the needy cannot say No.
IMO ▲ Collapse
| | | | Samuel Murray
Netherlands
Local time: 17:00
Member (2006)
English to Afrikaans
+ ...
Henry Dotterer wrote:
We often hear about payment periods of 30, 45 or 60 days after job date, or delivery of work. At the same time, many clients pay faster. ... What is your experience? How much does it matter to you how fast the client pays?
I don't know how soon clients pay the agencies. The excuses given by some agencies appear to indicate that their clients do not always pay in advance or somehow reserve the right not to pay them or to pay them much later or less.
I know from conversations with agency owners whose word I trust that the large tech companies (Microsoft, Google) often demand delivery months ahead of actual payment, which means that such agencies can get serious cash-flow difficulties if they choose to pay their translators sooner.
And I believe that some agencies are so small that have very little cash-flow, and I do not consider bad cash-flow to be a sign of a bad agency. Not all agencies are started with large amounts of start-up capital or are in countries where agencies can easily get long and large overdrafts to ensure good cash-flow.
On the other hand, I know that some agencies demand payment in advance from their clients, so by the time the job is assigned to a translator, the end-client had already paid, and long delays in paying the translators are simply a mean trick pulled by the accounting department.
My personal experience in working in an outsourcer environment has taught me, however, that paying translators from outside one's own country isn't always a simple task (various regulations and accounting practices make it difficult), even if the money is already available, and it's often more cost-effective to deal with such payments monthly instead of daily or even weekly. However, that does not excuse delaying payment beyond that once-a-month day.
Long payment terms do affect me as a translator, but mostly only if I haven't had a good spread of different clients with a variety of payment terms during the preceding period, or if I've had a hole in my wallet for a while (due to any of various circumstances). But I think that having different payment terms from one's client pool is a bigger nuisance than having long payment terms, because it means that even if work is steady, income is not. I suspect long or invariable payment terms have the most affect on translators who are bad at their accounting.
In an ideal world, the agency should be able to tell the translator when he can expect to receive payment. That in itself is almost worth more than having a short payment term that is of an unknown length.
Added:
I compared the date of invoice against the date of payment for my jobs of 2019. This is just an example, because every year is different, and sometimes clients pay multiple invoices at the same time. The percentages of clients paying within X number of days are:
within 1-14 days: 5%
within 14-21 days: 25%
within 21-31 days: 20%
within 31-45 days: 25%
within 45-60 days: 1%
within 60-90 days: 20%
within 90+ days: 5%
(does not total 100% due to rounding)
[Edited at 2020-03-12 08:34 GMT]
| | |
|
|
|
| Fair solution | Mar 12, 2020 |
Wouldn't it be fair if the term for translation submission, which depends on the volume, but let's say one week, was equal to the payment term?
| | | | The Misha
Local time: 11:00
Russian to English
+ ...
| You are only a victim the first time... | Mar 12, 2020 |
No wonder long payment terms many complain about tend to get longer still - it's because they are "not a problem," apparently, for quite a few, including some of the folks who offered their opinions here.
Personally, I - grudgingly - accept 30 days as "industry standard" although, for the sake of maintaining decorum in a public place, please don't ask me where I think such "standards" belong. Anything beyond that is a non-starter. To be sure, some of my long-time regulars may someti... See more No wonder long payment terms many complain about tend to get longer still - it's because they are "not a problem," apparently, for quite a few, including some of the folks who offered their opinions here.
Personally, I - grudgingly - accept 30 days as "industry standard" although, for the sake of maintaining decorum in a public place, please don't ask me where I think such "standards" belong. Anything beyond that is a non-starter. To be sure, some of my long-time regulars may sometimes be a few days late, but when you are in a relationship, whether business or personal, for years, things may get more touchy-feely than they would otherwise be. That said, over the past ten years I have dropped at least two agency clients who suddenly started dragging their feet when it was time to pay me and instead fed me those "check is in the mail" stories. One of them tried to come back later, pretending nothing had happened, but I said no, thank you very much. Good riddance. ▲ Collapse
| | | | | No problem with regulars | Mar 12, 2020 |
Most of my agencies pay 30 days or 45 days after EOM, and with an agency that sends work regularly and pays reliably like clockwork, this is no problem. It just means I have a regular income stream, even if the payments are for work I did two months ago.
The only issue I see here is the accumulation of risk. 45 days EOM means that I will have two outstanding invoices with the agency at any given time (when invoicing monthly), and also all work I did that was not yet invoiced. So if ... See more Most of my agencies pay 30 days or 45 days after EOM, and with an agency that sends work regularly and pays reliably like clockwork, this is no problem. It just means I have a regular income stream, even if the payments are for work I did two months ago.
The only issue I see here is the accumulation of risk. 45 days EOM means that I will have two outstanding invoices with the agency at any given time (when invoicing monthly), and also all work I did that was not yet invoiced. So if the agency runs into payment problems for any reason, I might lose quite a stack of money.
Most of my agencies today use automated systems for listing the completed and payable projects, so that there is actually no administrative reason to hold back payments. And in most countries, interest rates are virtually nonexistent today, so that it also makes not much sense financially not to pay immediately. In the end, agencies with long payment terms just unload part of their risk on their freelancers, and this is somewhat unfair, but common.
As a freelancer, you are responsible for your own financial situation, though. A big cash buffer is the best insurance, gives you a strong position in all negotiations, and makes sure you never have to accept bad rates or conditions. ▲ Collapse
| | | | | Pages in topic: [1 2] > | To report site rules violations or get help, contact a site moderator: You can also contact site staff by submitting a support request » How big of a problem are long payment terms? | Protemos translation business management system | Create your account in minutes, and start working! 3-month trial for agencies, and free for freelancers!
The system lets you keep client/vendor database, with contacts and rates, manage projects and assign jobs to vendors, issue invoices, track payments, store and manage project files, generate business reports on turnover profit per client/manager etc.
More info » |
| | Anycount & Translation Office 3000 | Translation Office 3000
Translation Office 3000 is an advanced accounting tool for freelance translators and small agencies. TO3000 easily and seamlessly integrates with the business life of professional freelance translators.
More info » |
|
| | | | X Sign in to your ProZ.com account... | | | | | |
Login to reply/comment 
Translation news
