A fee for payment?!
Thread poster: Jurate Janaviciute

Jurate Janaviciute  Identity Verified
Luxembourg
English to Lithuanian
Sep 1, 2009

I am puzzled. Doubly: as a businesswoman and as an accountant.

A client has transferred me 10 Euros less, reasoning that this is the fee he charges for a transfer. Now what is that? Is paying me the money I earned some kind of service for which I have to pay a fee?

Leaving philosophical question aside, how in the world I could record this translation without ending up in a disadvantaged position if I use accrual basis accounting (as opposed to cash basis)? I cannot write it of as a bad debt. It is not my business expense either, hence, non-deductible. So, it is my loss. But what did I do to get it?.. I am puzzled.

I am looking for a polite and effective way how to communicate this to the client

and/or

suggestions how to record it as a business expense and not to blush explaining it to a taxman

What do you do in such situations?


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Natalie  Identity Verified
Poland
Local time: 12:43
Member (2002)
English to Russian
+ ...

MODERATOR
Excuse me... Sep 1, 2009

But bank transfers aren't done free of charge, right? So either you get from your client a check (which does not cost anything to your client, but you will still pay bank charges and will wait for extra weeks for your money), or you get the money directly to your account, but somebody - you yourself or your client - should pay for the transfer. The best solution would be discussing such things with the client BEFORE getting paid. You may arrange things so that one half is paid by you and the other half by the client, or you may slightly rise your charges, or find some other solution. But this should be certainly discussed beforehand.

Natalia

P.S. And you can aks the client to send you the transfer confirmation where the transfer fee is shown, so you will be able to display this in your account book.



[Edited at 2009-09-01 23:23 GMT]


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John Jory  Identity Verified
Germany
Local time: 12:43
Member (2004)
English to German
+ ...
Bank charges within EU Sep 1, 2009

If you client is in an EU country, a bank charge of € 10 sounds exhorbitant. According to EU legislation, money transfers between EU member states may not be charged higher than inland transfers.
I had the same problem with a Romanian agency, but they backed down when I pointed out the EU regulation.

HTH, John


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Jurate Janaviciute  Identity Verified
Luxembourg
English to Lithuanian
TOPIC STARTER
time traveling would be a great invention Sep 1, 2009

I realize that there was prior miscommunication between us, but since I cannot turn the time back, I wonder if anything can be done in the present situation.

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Heinrich Pesch  Identity Verified
Finland
Local time: 13:43
Member (2003)
Finnish to German
+ ...
From where? Sep 2, 2009

Dear Jurate, you did not mention which country the client is from. Nowadays transfer within the EU is free of charge, but if the customer is from the US or other 'peripheral regions' we have to negotiate. Take this case as a lesson for further communications with your clients prior to accepting a job offer. At least I haven't had to pay for bank transfer even from Indian or US-American clients. British can be difficult too because of their antiquated banking system (sorry if I'm wrong and things have improved in the meantime).

And yes, write it off as expenses.

Regards
Heinrich

[Bearbeitet am 2009-09-02 00:02 GMT]


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Charlie Bavington  Identity Verified
Local time: 11:43
French to English
A suggestion Sep 2, 2009

Jurate Janaviciute wrote:

A client has transferred me 10 Euros less, reasoning that this is the fee he charges for a transfer.

Not the bank? Him. For the time he takes to arrange for the money to be transferred? Or someting similar?

It is not my business expense either, hence, non-deductible.

It is an expense incurred by your business in collecting monies owed. I would record it under the same category as bank charges for transfers (of any kind).

At the same time, because you need to officially record it somewhere, asK him for some kind of document as evidence that it happened (invoice for you to pay him 10 euros for filling in a form, or receipt of said 10 euros, or both).

I leave it entirely up to you as to whether you then decide to invent "problems" with the first copy of this document such that it most definitely costs this buffoon considerably more than 10 euros in time before you get a document that you find acceptable (or better yet, that the Lithuanian tax authorities find acceptable - I expect their requirements can be quite arcane and imaginative to the uninitiated ).


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Henrik Pipoyan  Identity Verified
Local time: 14:43
Member (2004)
English to Armenian
It's more than normal Sep 2, 2009

Only 10 euros... You're lucky. I pay $ 45-50 for each wire transfer or for clearing a check, plus 0.5% to the bank when I cash the funds. And in case of a check I'll have to wait for a month until I can use the money.

I think the bank charges should be reflected in your monthly statements that you receive from the bank. Otherwise your bank should be able to give you a detailed document showing all bank charges of the transaction, including the charges of both sending and receiving banks.


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RobinB  Identity Verified
Germany
Local time: 12:43
German to English
Accounting entries Sep 2, 2009

Jurate Janaviciute wrote: A client has transferred me 10 Euros less, reasoning that this is the fee he charges for a transfer.


If the client himself is charging for transfers, he probably needs a banking licence. However, I presume he's trying to recharge you for what his bank charges him for the transfer. This is certainly non-standard business practice, in which each party to a transaction covers its own transaction costs, and different arrangements must really be stipulated in writing.

Leaving philosophical question aside, how in the world I could record this translation without ending up in a disadvantaged position if I use accrual basis accounting (as opposed to cash basis)? I cannot write it of as a bad debt. It is not my business expense either, hence, non-deductible. So, it is my loss. But what did I do to get it?.. I am puzzled.


Dr: Revenue
Cr: Transaction costs

(similar in essence to the accounting entry for customer-deducted discounts)

or, until the issue has been cleared up:

Dr: Revenue
Cr: Suspense account

(This would be the standard procedure for dealing with under- and overpayments, which happen with monotonous regularity in all business transactions.)

If you're going to challenge the client on the deduction:

Dr: Revenue
Cr: Bad debt allowance

I am looking for a polite and effective way how to communicate this to the client


You can tell the client that you're surprised by the deduction because you did not agree to it in advance. If the client refers to his general terms and conditions of purchase, did you receive these already? If not, the deduction will be generally invalid.

As a general rule, only cash-strapped or extremely greedy companies try to charge this sort of deduction without advance agreement. Probably a good reason for not working for them any more.

FYI, the references by other answerers to "free of charge" transfers or transfers "charged at domestic transfers" could be misleading. This refers to the SEPA rules, which apply solely to EUR transfers within the EU, i.e. a) to transfers within the euro zone (e.g. between accounts in Germany and France) and b) to transfers where one or both accounts are outside the euro zone, but denominated in EUR (e.g. from Germany to a EUR-denominated account in Lithuania). Eligible transfers must be between IBAN accounts.

These transfers are only free (to either party) if domestic EUR transfers in that party's country are also free. The general rule is that the charge for cross-border EUR transfers (covered by the conditions described above) may not be higher than the charge for domestic EUR transfers (of course, charges for business customers may differ from those for personal account holders). Details e.g. here:

http://www.ecb.int/paym/sepa/html/links.en.html

http://www.europeanpaymentscouncil.eu/index.cfm

HTH,
Robin


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jyuan_us  Identity Verified
United States
Local time: 06:43
Member (2005)
English to Chinese
+ ...
The philosophy is easy Sep 2, 2009

If you're not willing to pay it, your client has to pay it. It's charged by the bank.

Almost every Chinese translator has to pay it.


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Derek Gill Franßen  Identity Verified
Germany
Local time: 12:43
German to English
+ ...
Ridiculous... Sep 2, 2009

Am I now able to give the cashier at a store $4 less, because that is what I had to pay to my bank when I withdrew the cash from a teller? Certainly not.

What happens when the bank the other person chose to use decides to charge 99% of the sum to be transferred in fees? Does that mean that person only has to make sure 1% of the sum owed actually gets to you? No.

If someone owes me $100, then it is $100 that I need to receive, not one cent less. It is up to them to find a (for them) cheap method of getting the money they owe into my hands.


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xxxNMR
France
Local time: 12:43
French to Dutch
+ ...
Just tell them Sep 3, 2009

Derek Gill Franßen wrote:
If someone owes me $100, then it is $100 that I need to receive, not one cent less. It is up to them to find a (for them) cheap method of getting the money they owe into my hands.

Just tell them that you remain owner of the translation until your invoice has been paid in full.


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Jurate Janaviciute  Identity Verified
Luxembourg
English to Lithuanian
TOPIC STARTER
Thanks! Sep 11, 2009

Than you, guys. I had a great time reading your answers. At least I realized that I'm not nuts

Apparently, my dear client wanted to cover for his part of the shared international transfer costs. And I still haven't figured out what prevented him from selecting the option "charges paid by the receiver". Of course, he will not come up with any document that would justify these 10 Euros as my business expense.

As of today, I consider that he hasn't paid me in full. And it looks like that there is a long road of renegotiation ahead, because I want shared transfer costs. But even me paying full bank charges would be better than that! There is hardly anything worse than paying taxes on money that I have not received.

Alternatively, I could suggest getting a banking licence, but I am very afraid that this will neither classify as polite, nor as effective


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