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VERY late payments from agencies -- what recourse (if any) does a subcontractor have?
Thread poster: Ulrike Lieder
Ulrike Lieder  Identity Verified
Local time: 18:38
English to German
+ ...
Oct 4, 2001

Case in point: a very large agency is extremely late in paying its subcontractors. The purchase orders they issue state that payment will \"normally\" be made within 45 days from the date of invoice.



The reality is starkly different - personally, I consider myself fortunate to have received payment after 4 1/2 months (and only after several rounds of reminders to their A/P dept., starting at 60 days after the date of invoice). I know of many colleagues (some overseas) who are in a similar situation; work was delivered on time, payment was delayed again and again and again. (Standard reply from the agency is that they do not know when they will be able to pay...)



This is not an isolated occurrence, either, but has been going on for quite some time now.



Aside from not accepting any more work from such an agency (or accepting it only if you can afford to lose the time and/or money), what options would one have as a freelancer? Adding late charges and re-submitting the invoice would only result in its being pushed that much further down the payment chain. Small claims court is often not an option, either; judgments awarded by small claims courts are notoriously difficult to collect, even more so if the subcontractor resides in a different state. (In fact, I\'m not even sure if you can take a company that\'s headquartered in a different state to small claims court in your home state.)



I\'m positive that I\'m by no means the only one to have encountered this problem, where, in effect, one is left \"holding the bag\". I\'d be interested to hear how other freelancers have handled such situations (and with what rate of success).



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yacine  Identity Verified
Local time: 03:38
Arabic to French
+ ...
be strict and precise Oct 4, 2001

Dear poster,

you should write a dealine in your invoice. This deadline should be respected. Your price should not change. If you change your price, the agency will try to take profit of what will be considered as a weakness on your part.

If you feel something wrong going on in the agency, let it go and do not work for them.

As far as the payment is concerned, write to them a registered letter asking them to pay you.

If they dont, tell them you will sue them. They will wake up.

It happened to me twice having flakky businesses speaking to me. Twice, they were saying non sense and twice I did not give them the translation.

Good luck

Yacine



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Werner George Patels, M.A., C.Tran.(ATIO)
Local time: 21:38
German to English
+ ...
Ours is a risky business Oct 4, 2001

Ulrike,



Unfortunately, there are no ready-made solutions to this problem. As I was saying to a colleague in the US the other day, we always take a big risk with new clients. In some cases, it is possible to check them out (for example, through the TCR list), but more often than not it is all we can do to either accept a new client or turn them down.



However, it is not only new clients that may pose a risk - even regular clients may go \"bad\" after some time.



Example: I was working for an agency for almost 2 years before they turned nasty. I still don\'t know what happened, but they kept blaming this problem on staff turnover, new accounting systems, etc. Throughout those 2 years, they would normally pay me within 30-45 days. Then, the problems started: 3, 4, 5 months would go by and still no cheque. They eventually paid up (including late-payment interest), but I made it very clear to them that I was unable to continue working for them under these circumstances.



I have been following various discussions on this topic, and here are my conclusions:



- many colleagues think that they simply have to contact a collection agency in order to get their money. WRONG! In many cases, that won\'t get you anywhere either (especially with international clients), and if you do get paid eventually, you will have spent a lot more money.



- small-claims courts are not the solution either. As has been pointed out repeatedly, enforcing a judgment is often next to impossible.



- working for direct clients poses the same kind of risk as agency work (maybe even worse)



- \"bad\" agencies or clients all have tell-tale signs; we just have to get better at reading them.



- translators associations should set up a fund for members that got cheated by a client (this may not be a realistic solution, and it would only help translators who are members of such associations, but it is the best thing I can think of right now).



- we all simply have to become \"tougher\" with our existing and potential clients. For example, inform your clients that they will receive the translation only if they pay you 25% or more of the expected price in advance (or by the deadline of the translation). Some people on various payment lists have suggested the introduction of \"retainer fees\" (like lawyers) in order to have some financial cover in case things go bad.



I invite fellow PROZ members to use this space to make additional suggestions. Maybe we\'ll find a workable solution to this problem that, yes, does affect each and every one of us. Ulrike, you are definitely not alone!


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yacine  Identity Verified
Local time: 03:38
Arabic to French
+ ...
professional body Oct 4, 2001

Dear Ulrike,

one more thing you can do is becoming a memeber of a translator association or any professional body dealing with translation.

The good thing would be having a mailing list common to all members of this professional body/translator association. You would send your question about agencies to the list and people would give you an answer.

It is the case in France and in England. I told my Italian colleague to do the same.

What would be good is if we could share the information with each other.

This is what I did with my Italian and Spanish colleagues

Good luck and I hope it helps you out

Yacine



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Hans-Henning Judek  Identity Verified
Local time: 10:38
German to English
+ ...
Translators unite! Oct 4, 2001

Dear Ulrike,



I agree to everything written in above answers to your problem. Fortunately I have very long standing relationships with my customers and little problems, but in the past, I had a couple of rough experiences.



Usually late payment means that the agency is in trouble. When they go belly-up, you loose everything. So be careful with accepting work from them. I was several times very fortunate and can remember one case, where the agency owed my $12,000. They did not pay in time and did not call me to excuse the delay. So I immediately went to their office, talked to the manager, who spoke about a \"momentary cash-flow problem\". I made a payment plan with him and got the promise that they keep up with the installments. They did and except of $400, I did not loose anything when they went bankcrupt a couple of months later. Very lucky! A French translator friend, who did the same translation, lost substantially.



What I feel most important is, building up a personal relationship with the people in charge. Don\'t deal only with e-mail - phone them, talk to them, and if you have the chance, visit the offices personally. It is a lot easier to just call and say \"Hey Fred, what is happening...\"



My customers call me, if they have a cash flow problem, which happens from time to time, because they get their money from the customers after 90 to 180 (!) days, while they pay their translators after 1 to 3 months later (account closing at the end of the month). This can lead to cash flow problems. If they are open with you, there is no reason to worry, if they just stay mute, just don\'t pay - a red alarm should go off...



Build a trustful relationship - that usually prevents a lot of disappointments.



Then we have the \"now and then\" guys, where you never know...a difficult problem anyway.



Now to my Subject line:

Organizations like PROZ could become something like a translator union in relation to the agencies, or at least a forum, where you can publish your problems. If we would have a agency list with a BBS, where translator can vent their anger, agencies would become a lot more careful.



Agencies should be informed about complaints and should have the opportunity to give a counter statement. Then such a system would not create legal problems.



In any case, complaining in such a manner is not very helpful for client relations, so this would probably be a last resort. Still, publishing bad payment patterns is a good weapon.



Ulrike, you are one of the KUDOZ heavyweights in PROZ, maybe you can take the initiative and move something in this direction.



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Ulrike Lieder  Identity Verified
Local time: 18:38
English to German
+ ...
TOPIC STARTER
David vs. Goliath: personal, trustful relationships with corporate giants? Oct 5, 2001

I deliberately couched my initial posting in very general terms.



I absolutely agree with Hans-Henning that building a long-term, personal relationship with one\'s clients is essential. This was indeed the case with this particular agency with which I have worked for at least 15 years or so. However, going to their office and saying \"hey Fred, what\'s up\" is generally not an option when you and your client are located in different states and time zones (remember, the US is a very large country...).



In fact, one of the reasons I have continued working with this particular client even after payments started coming later and later was the fact that I had (and in some cases still have) such good working relationships with the project managers in the various offices. (I might add, though, that many if not most of the PMs I\'d gotten to know over the years have left during the past 2 - 3 years while the corporate structure was changing and becoming ever more \"corporate\" in the worst sense of the word).



I am a member of several professional associations (including the ATA which offers its members discounts on collection services through Dun & Bradstreet), but I\'m afraid, Yacine, that that alone is not sufficient. And in a country as litigious as the US, you have to be very careful and circumspect when asking information, especially sensitive information such as this, on lists.



What I had hoped to elicit were some \"real life examples\" of how people have dealt with / resolved late payment issues. Hans-Henning\'s approach works with small companies but gets rather difficult when the people who write the checks are far removed from the people who assign and manage the projects. It gets even more difficult in a large corporate setting where there are several \"layers\" - the people who write the checks (and to whom payment questions are to be addressed) are not the people who actually control the purse strings and allocate the funds for the checks to be written against.



Anyway, thanks for all your insights. Any further thoughts would be greatly appreciated.















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Beth Kantus  Identity Verified
United States
Local time: 21:38
German to English
just a couple thoughts Oct 5, 2001

Hello Ulrike, I\'m sorry to hear about problems with agencies. I generally don\'t have trouble with the ones I work for, but as the other answers show, that could change. I was thinking about what you said as far as having to be very careful in what you openly disclose about agencies, and I fully agree. I was wondering though if an organization (of translators) could find a way to provide an information service similar to the one offered by most Better Business Bureaus or Chambers of Commerce regarding complaints about registered businesses. It would not be a quick fix, but might be something to think about.

The only other solution I can think of off the top of my head is similar to the suggestion about a \"down payment\" before the submission deadline. But 75% is still a lot to risk, particularly with large projects.

Perhaps the project could be broken down into several payment dates, and payment must be made before that segment is delivered. For example, many company agreements call for the payment to be divided into several \"installments\" that are due at order confirmation, at various technical points such as acceptance inspections, with the balance due then when delivery is fully effected. Perhaps that might work?

I look forward to hearing others\' ideas on this.

Best regards,

Beth


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yacine  Identity Verified
Local time: 03:38
Arabic to French
+ ...
mixture Oct 5, 2001

dear Ulrike,

the only solution to your probleme is a mixture between what I said to you and all what was said before me

Good luck

Yacine



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Tomas Miller  Identity Verified
Spain
Local time: 03:38
Spanish to English
+ ...
Be patient Oct 6, 2001

Dear Ulrike and posters,



My experience is that big banks generally take their time to pay, sometimes up to six months, while private individuals pay on the spot. Agencies and most direct clients normally pay in 30-60 days. Those that take longer to pay are usually going through some kind of financial crunch, and one must decide whether it is worth the risk to continue taking on jobs from them. In practice, I have had only one case of default in 18 years, for an amount of 100 euro out of a total price of 400, by a very small agency that was poorly managed and soon closed.



My advice is to be patient and demand payment every now and then, until you collect. However, I must admit that I have terminated certain clients that have taken more than six months to pay, including banks, because it seems insensitive on their part to take so long to pay a free-lance translator.



The most effective way of putting pressure on a client to pay, I find, is to threaten to report his case in a translators\' forum. If I ever actually have to do so, the question will be how to report the matter without infringing the client\'s rights. As a matter of principle I am against \"halls of shame\" or black lists of debtors.



Tomas Miller

(Madrid)



Quote:


I\'m positive that I\'m by no means the only one to have encountered this problem, where, in effect, one is left \"holding the bag\". I\'d be interested to hear how other freelancers have handled such situations (and with what rate of success).





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Ulrike Lieder  Identity Verified
Local time: 18:38
English to German
+ ...
TOPIC STARTER
Patience can be costly Oct 10, 2001

Quote:


My advice is to be patient and demand payment every now and then, until you collect. However, I must admit that I have terminated certain clients that have taken more than six months to pay, including banks, because it seems insensitive on their part to take so long to pay a free-lance translator.





Tomas,



That\'s how I\'ve been handling these issues, too. However, when I contract with an agency that specifies its payment terms in its purchase orders (45 days from date of contractor\'s invoice), I should be able to expect them to honor the terms that they themselves have set. (And incidentally, where else does the buyer get to dictate the terms of payment for services rendered?)



This particular agency is in the habit of telling contractors that their clients are slow in paying them (what with the slowing economy) and that they therefore do not know when they can pay their subcontractors. (In effect, they are asking their subcontractors for interest-free credit.) The subcontractor, on the other hand, must still pay his/her bills on time; the power company or the phone company is not interested in my receivables or slow-paying clients, they still expect to have their bills paid on time. If the agency owes the subcontractor a large amount of money on which s/he has counted, s/he may end up having to dip into a line of credit in order to meet his/her obligations, incurring interest charges in the process.



My feeling is that if I hold up my side of the bargain, i.e. deliver my work on time, do quality work, they should hold up their side of the bargain as well, i.e. pay me within the period of time they say (in writing!) that they will. Reality, alas, is not quite as clear-cut.



If 45 days stretch to 60 or even 75, and the client is up front with its subcontractors, I don\'t think anyone would mind (I know I wouldn\'t). However, if 45 days stretch to 90, 120, 150, and more, and all you get is \"we don\'t know when we will be able to pay you, but we appreciate your patience\", I get not only worried, but also very angry.



I know there is no patent solution to this dilemma (much as I\'d like to see one!). My current solution in this particular case is not to accept any work from the client. If there is a next time, I might try to ask for a down payment (a retainer as it were) and see what happens...





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Werner George Patels, M.A., C.Tran.(ATIO)
Local time: 21:38
German to English
+ ...
It all comes down to the basics of contract law Oct 10, 2001

Ulrike,



You are sooooooooo right. Agencies seem to overlook the most fundamental rules and principles of contract law. The contract you have with them is different from the contracts the agency has with their clients.



In other words, even if their clients never pay, they will still have a contractual obligation to pay you.



I suggest that, if the problem persists and if they are located in a jurisdiction not too far from your own, you take legal action and sue them for breach of contract, default on payment as well as gross violation of contract law.


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Nikki Scott-Despaigne  Identity Verified
Local time: 03:38
French to English
Contractual relationships with agencies Oct 12, 2001

Whilst I now work exclusivley with \"direct clients\" only, past agency experience demonstrated that it was commonplace to be paid very late indeed. (France).



Typically, contractual terms stated that translators would be paid 60 days from the end of the month in which the agency received the translator\'s bill. (Send bills by some form of mail which provides you with an acknowledgement of recipt, worth it for big bills.) This meant that work completed at the end of December, billed in the beginning of January would not in fact be paid until the end of March/beginning of April. This practice is wholly unacceptable.



Back to basics.



1 - Agree terms before taking on the work. Keep copies of everything. Get your client to sign even just a fax order form. Useful for first contact with new clients or for big jobs.



2 - Fix a limit above which you will not work unless a deposit is paid upfront. Taking yourself seriously means you stand a better chance of being taken seriously in return. It did not always work with agencies, but sometimes did and certianly helps keep the cash flowing. With direct clients, this is usually successful. At least for a first contact.



3 - Whatever the amount billed, do as you would be done by. For historically bad payers (apart from refusing work from them), try calling BEFORE your established deadline to see if the payment is being dealt with. Otherwise :

- wait 1 week beyond the deadline and telephone

- send a recorded delivery/ack of receipt reminder, stating further deadline

- if they don\'t take any notice of your serious reminder, to within 24 hours, send a further reminder (rec delivery/ack receipt) with the amount owing + interest at the statutory or contractual amount



4 - If none of the foregoing works, then find out about the cost of a first letter from a debt collector.



All in all, many clients, not just agencies, come out with the \"my client has not paid me yet\" excuse. And it IS just an excuse. You have no privity of contract with their client. They have sought your services and have to pay you. Whether or not their client has paid up is not your problem, it\'s theirs.



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Beate Lutzebaeck  Identity Verified
New Zealand
Local time: 14:38
Member
English to German
+ ...
Putting up with defaulting clients? No way! Oct 16, 2001

Hi Ulrike,

I am tackling this problem from various angles.



1) I work primarily on a cash-on-delivery basis, i.e. I require immediate payment on invoice. This might not always be practical when dealing with agencies as it might cause a cash-flow problem on their part which leads me straight to No. 2.



2) Beware of agencies that don\'t have enough pricing power in their own market to get their clients to pay COD, and are therefore burdened by cash-flow problems. Those agencies tend to pass any unreasonable requests directly from their clients on to the translator anyway and are therefore not particularly desirable clients to have.



3) Draw up terms and conditions and make your clients aware of them (or, even better, have your clients sign them) on commissioning a job. These terms and conditions should state that default interest of ..%p.a. (whatever percentage is considered acceptable in your jurisdiction) will be charged if payment is not made by (enter date, i.e. two weeks after date of invoice) and that the costs of collection of both payment and default interest will be recoverable from the client. This should deter dodgy payers, as they eventually get slapped with a higher bill (it also sends out a clear message to new clients that you mean *business*).



Now, having said that, I have not yet drawn up my own terms and conditions. I never considered them necessary as I was only working with long-term clients and referrals, and wanted to avoid the antagonistic connotation associated with General Terms and Conditions. However, recent experiences taught me a lesson. A client (not a translation agency) had referred one of their clients (the European offspring of a major US stock exchange) on to me. The person who commissioned the translation work was based in one country, the accounts dpt of this rather large organisation in another. I\'ll spare you the gory details but it took me *three* months to get my money and only after instructing a collection agency. 20% of my fee went down the gurgler in collection fees (\"Lehrgeld\") - and I got off comparatively cheaply.



Anyway, this can happen with the best of precautions and was a first for me in 3.5 years as a free-lancer. Needless to say, that clients who operate that way don\'t get a second chance with me.



One thing I noticed, though, within the translation community, is that professional translators often don\'t seem to value their own work enough to demand being treated as the professionals they are. A confident and consistent approach goes a long way to being taken seriously and treated with the respect you deserve.



Greetings from down under - Beate Lutzebaeck


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Evelyna Radoslavova  Identity Verified
Canada
Local time: 18:38
English to French
+ ...
What do you think of this approach Nov 13, 2001

I just found this forum. I saw some very interesting advice and most of them are great for the future.



In the specific situation described by Ulrike (and I am afraid I will shortly face a similar one), I would write a very nice letter to my client stating that I value our longstanding relationship but I cannot continue to work with them in the circumstances (describing what they owe me and what steps I have already taken to recover my money). I\'d give them a reasonable deadline (2 weeks?) to contact me and establish a payment schedule (if they do call, I will put anything they promise in writing and have it signed).



I would add that my loyalty towards fellow translators compels me to inform them of the client\'s unacceptable payment practices and that unless the problem is resolved within 2 weeks I will be obliged (and deeply regret it) to post the information on such and such mailing lists/BBS read by so many thousands of colleagues.



Finally, I\'d sweeten it by saying that I believe their delay is not characteristic, that I trust that they will set things right and that I will gladly work with them again once the problem is resolved.



And send the letter by registered mail.



If this gets no results, I would have no other choice but to follow through with postings and a collection agency. This would mean that the client is in deep trouble and doesn\'t care or can do nothing about what happens to their business next.



I am no lawyer, so I\'d like to get your input as to whether anything in the above might harm my chances in small claims court later.



[ This Message was edited by: on 2001-11-13 03:07 ]


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Nikki Scott-Despaigne  Identity Verified
Local time: 03:38
French to English
Going to court - or avoiding it and sticking to your guns Nov 17, 2001

-unpaid bill

-recorded delivery/proof of receipt mail demands for payment (with time limits)

-no result?

-debt collectors

-small clamis court

-judgment in your favour...not the end of the story





If you win in court, your rotten client will know about it, but this might not be enough to force him into paying. You may need to seek an enforcement order of some sort. This means going back to court. If it is only at this stage that you discover they genuinely cannot pay, you have thrown good money after bad and may be even worse off than ever.



They know that you knwow that and some play on it. Don\'t be put off. Go fo it, use the system. Try everything (legal) you can to get what you are owed.



I once heard it said that it is more difficult getting money from people who can\'t pay than from those who don\'t want to pay.



Those who cannot pay may just be going through a temporary cash-flow crisis. (No tears of sympathy though, as their cash-flow crisis can become yours too if you\'re not careful. This is where asking them to pay in instalments can come in useful). Chances are they are honest and will pay sooner or later - usually later. If you want to continue working with them, now is the time for you to get money up front of course. You may also decide it\'s time to part company.



Those who don\'t want to pay you are often tougher. They can make you sweat it out as you go through the classic procedures to recover your money. At some stage they will pay up, usually a late stage. It may be too late for you, so be tough. If they\'re about to go belly up, grab your money and run. There may be room for negotiation here.



One off-shoot of a major company being run as an association once ordered work from me. We agreed everything in writing, the work was supplied, receipted, the bill signed and sent for payment. I had worked for the asociation a couple of times before with no problems. This time round things were different. The mother company refused to pay saying that they had not authorised the association to order the work as it could have been done in-house. The mother company had just survived a major shake-up and buy-out and the holders of the purse strings were playing hard. I had to get really nasty and produce all the documents I had (order on the association\'s letterhead, receipted work, bill signed etc) and involve a firm of debt collectors to get the money through. Five months before I was heard. Whatever the story in-house, a lack of communication probably, the work had been ordered in the association\'s name. The work had been done to their satisfaction and delivered on time, they had to pay. I received my money within 48 hours of having involved the debt collectors. Had I not done so, the 5 months I had been fighting away until then would have trailed on indefinitely. Moral of the story? Get it in writing. When push comes to shove you have docs to prove what was agreed. Any in-house disagreement cannot be and should not be your problem, but it may be the reason why a client who cannot pay is not paying. You do not always know where the sticking point lies.



I now no longer wait 5 months before getting formal. For the record, my terms and conditions state payment upon receipt of a bill / no later than 30 days. Interest at the statutory rate of X% per month or part thereof over the deadline. I apply that to within 48 hours : two days late and a new invoice goes out with the interest added on. One more month and it’s recorded delivery letters with a one week time limit. One day over and I in come the debt collectors. This is all set out in my terms and conditions. My clients know how things work from day one.



[ This Message was edited by: on 2001-11-17 19:49 ]


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