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Early payment discount
Thread poster: Sonja Biermann

Sonja Biermann  Identity Verified
Local time: 23:06
English to German
+ ...
Jun 5, 2008

Dear colleagues

I am interested in your opinion on new payment terms I received by email:

„Upon analyzing the diverse contracts we have in place with our own domestic and international customers, we found payment terms ranging up to a maximum of 120 days. We decided we needed to standardize all agreements with our partners in the future to a uniform 60 days net (or 10 days with a 2% early payment discount). The absolute majority of our clients require 60 day payment terms from us.“

Do translators usually offer an early payment discount?

Many thanks and kind regards
Sonja


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Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 23:06
English to Dutch
+ ...
No way! Jun 5, 2008

60 days is long... EU regulations state that EU companies must pay each other within 30 days maximum.
So basically they say: we offer you bad payment terms, but if you want us to behave decently, you can pay us for it.


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Damian Harrison
Germany
Local time: 23:06
German to English
Er...no Jun 5, 2008

I've certainly never heard of it. Would your client accept a penalty for payments made later than 10 days?

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Ivana Friis Wilson  Identity Verified
United Kingdom
Local time: 22:06
Member (2008)
English to Danish
+ ...
Never heard of it Jun 5, 2008

- but giving 2% discount for being paid within 10 days sound like a good deal to me

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Andrej  Identity Verified
Local time: 01:06
Member (2005)
German to Russian
+ ...
My answer to them Jun 5, 2008

I received the mail too. And I answered immediately that I would not work with them under such conditions. 60 days or discount for an early payment - I think I can survive without such dirty tricks.



[Edited at 2008-06-05 15:56]


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Giovany Rodríguez Monsalve
Colombia
Local time: 17:06
English to Spanish
+ ...
What does "early payment discount" means? Jun 5, 2008

That's the point in here.

If a project it is finished today and they will pay tomorrow, I accept the discount.
I think that client means early payment = 30 days.


Cheers!


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Juan Jacob  Identity Verified
Mexico
Local time: 16:06
French to Spanish
+ ...
Mister mechanic... Jun 5, 2008

...you fixed my tire, thanks.
As I'm paying you right now, please accept this money with a 10 % discount.


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Katalin Horváth McClure  Identity Verified
United States
Local time: 18:06
Member (2002)
English to Hungarian
+ ...
From the financial management point of view Jun 5, 2008

Early payment discounts are not unheard of in business, and those should be evaluated based on comparing the discount percentage and the prevailing interest rate.
In other words, if you would normally require net 30 days payment, and you say you give them 2% discount if they pay within 10 days, then what you should calculate whether putting the discounted amount into the bank for the remaining 20 days would give you enough interest to cover the difference (what you lost by the discount).
This way you will see whether it is a good deal or not.
Interest rates vary by country, by bank, by currency, and over time, so the situation can change.


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lexical  Identity Verified
Spain
Local time: 23:06
Portuguese to English
Unrealistic attitudes Jun 5, 2008

I can never understand why there is so much whingeing in these forums about being paid within 30 days, or a week, or the next day. It seems to me that standard practice in northern Europe is to pay at 30 days, commonly stretching to 60 days in southern Europe. Most suppliers accept these business conventions and plan accordingly. Why is it so difficult for some translators to accept this? I suggest that it's because they're not really businesslike in their attitudes, despite what they think.

If translators worked as company employees, they could expect to receive their salary a month in arrears. Or would they expect to be paid at the end of the week, or every day? I've organisd my cashflow to cope with 60 day payment terms, with 30 days as the occasional surprise, and it poses no difficulties.

Of course, if you have so little work that you need to be paid the next day in order to put food on the table....


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Williamson  Identity Verified
United Kingdom
Local time: 22:06
Flemish to English
+ ...
In God we trust, all others pay cash Jun 5, 2008

lexical wrote:

I can never understand why there is so much whingeing in these forums about being paid within 30 days, or a week, or the next day. It seems to me that standard practice in northern Europe is to pay at 30 days, commonly stretching to 60 days in southern Europe. Most suppliers accept these business conventions and plan accordingly. Why is it so difficult for some translators to accept this? I suggest that it's because they're not really businesslike in their attitudes, despite what they think.

If translators worked as company employees, they could expect to receive their salary a month in arrears. Or would they expect to be paid at the end of the week, or every day? I've organisd my cashflow to cope with 60 day payment terms, with 30 days as the occasional surprise, and it poses no difficulties.

Of course, if you have so little work that you need to be paid the next day in order to put food on the table....


For the umpteenth time: You may have arranged your payment terms and it may be business practice in Southern-Europe to pay after 60 days, but it goes against any law about payment terms in the E.U (according to the E.U-guideline with regard to payment in business transactions). In case you did not know, this guideline was transposed into national law. For you, laws are just ink on paper.
Sorry, mate, no credit given or In God, we trust. All others pay cash (30 days).
Go to your doctor, dentist, your lawyer or any other professional and ask them if they accept to get paid after 60 days or pay your utility bills after 60 days. After all, that is a custom in Southern Europe? Wait and see what happens.
If you do not have the money to finance at least 1 project, you should not be in business as an outsourcer.


[Edited at 2008-06-05 18:19]

[Edited at 2008-06-05 18:21]


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lexical  Identity Verified
Spain
Local time: 23:06
Portuguese to English
so why aren't they being prosecuted? Jun 5, 2008

Williamson wrote:

You may have arranged your payment terms and it may be business practice in Southern-Europe to pay after 60 days, but it goes against any law about payment terms in the E.U (according to the E.U-guideline with regard to payment in business transactions). In case you did not know, this guideline was transposed into national law. For you, laws are just ink on paper.


This Directive is, in fact, only so much ink on paper. If it had teeth, firms all over Europe would be dragged before the courts in their thousands every week. In fact, it's totally unenforceable. As I understand it, the Directive (and its transpositions into domestic law) do not legally require firms on risk of prosecution to pay within 30 days, but simply entitle creditors to add interest for late payment after that time. How many hard-pressed creditors are going to do that and expect to retain the customer? That's why I say it's toothless.

I leave others to worry about their cash flow. My business is profitable enough - and short term interest rates are low enough - to easily accommodate granting 60 days' credit to good customers.
Get real.

P.S. Incidentally, I do pay my utility bills at 60 days, but my dentist is a grasping b*st*rd.

[Edited at 2008-06-05 18:37]


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Katalin Horváth McClure  Identity Verified
United States
Local time: 18:06
Member (2002)
English to Hungarian
+ ...
Freelancers vs. employees Jun 5, 2008


If translators worked as company employees, they could expect to receive their salary a month in arrears. Or would they expect to be paid at the end of the week, or every day?


Comparing freelance work with employment is like apples and oranges.
Yes, if you are employed, you can expect to be paid on whatever regular schedule you agreed on. The key word is steady, regular payments. That is different from freelance work.
Employees get benefits, such as health insurance and retirement. Freelancers have to get their own, if they want/need it.
FYI, even employees get paid on different schedules, not necessarily monthly. Some companies issue paychecks every 2 weeks, or even weekly, especially for physical labor. There is also a sector where workers can get paid on a daily bases, according to the work done that day (for example seasonal agricultural work).
So, comparing full time employment with freelancing, (which is more like contract-based, project by project) is not that simple and if a freelancer cannot afford giving 60 days credit to his/her customers it is not necessarily his/her fault.

We are here not to belittle, but to help each other.


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Claire Cox
United Kingdom
Local time: 22:06
French to English
+ ...
Vote with your feet! Jun 5, 2008

As it were.... I received this e-mail too and, like Andrej, told them that my terms were 30 days net and I was not prepared to extend them. I have enough other clients who pay within 10 days (or less!) not to worry about agencies offering such ludicrous terms. I usually submit my invoices at the end of the month, as it makes life simpler if there are a lot of jobs for each particular client. If I were to accept terms of 60 days, that would mean that I could theoretically be waiting three months for payment for a job I did at the beginning of the month. That's just unacceptable in my book.

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Sonja Biermann  Identity Verified
Local time: 23:06
English to German
+ ...
TOPIC STARTER
No whining, but price calculation Jun 5, 2008

Dear lexical

Maybe I wasn't clear.
The question was: Do you offer an early payment discount? Or in your case more appropriately: Do you offer a discount for receiving payments after 30 days instead of 60 days?

As you pointed out, a professional translator embraces the standard and "plans accordingly". If you have a mail order business (or any other business for that matter) and offer an early payment discount, than this discount is already priced in (or planned accordingly). You actually pay more, if you wait longer. This is price calculation 101.

I am not a warehouse, I produce translations. I receive a standard rate for my translations that I view as something hypothecal - or has anyone been able to really calculate his/her rate? Your customer offers and you take it or leave it. So I have a hard time understanding how a discount could be priced in.

Best regards
Sonja


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Atena Hensch  Identity Verified
New Zealand
Local time: 11:06
English to Farsi (Persian)
+ ...
Never Jun 5, 2008

this is odd. Why they want to have discount? Do they pay interest on top of the money they will pay after 60 days?

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