Suspending collaboration until reliable payment is confirmed
Thread poster: Roman Lutz

Roman Lutz  Identity Verified
Germany
Local time: 13:29
English to German
+ ...
May 3, 2016

So I have started working with an agency that seems to make a professional impression and seems to have a good amount of work for me. The rates are also good.

However, checking the Blue Board and from feedback I have received from other translators who have worked with this agency in the past, it seems the agency's payment behaviour seems to be consistently bad (at least in the last year or so). The payment terms are already 60 days from invoice date, which I can accept as long as payment is made in full and on time. However, it seems that with some translators, the agency pays 1-2 months late (on top of the 60 days), and with some it doesn't pay at all without several reminders.

So far, I have completed two projects for this agency, nothing too big; now, before I get myself into a dilemma with a huge amount of unpaid invoices until I can verify if and when they pay (that is in 2 months at the earliest), I would like to request my fellow translators' opinion on this:

Does it seem a good idea to suspend the collaboration by telling the PMs something along the lines of "According to my research, your company has a history of late payment/non-payment; please understand that I do not want to take any risks in this regard. Therefore, I cannot accept any further projects until my first few invoices have been paid timely and in full. After I have confirmed reliable payment on your side, I will be happy to continue this working relationship on a more regular and continuous basis"?

Or am I doing away with a potentially fruitful collaboration by scaring off the PMs (who would rather just ditch me and try someone else than deal with my suspiciousness?


Any kind of input on this is appreciated!


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John Fossey  Identity Verified
Canada
Local time: 07:29
Member (2008)
French to English
Run, don't walk May 3, 2016

If the company has such a payment history they are most likely experiencing cash flow problems. If you continue to work for them you run a very real risk of never getting paid, given the history reported by others.

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Jenny Forbes  Identity Verified
Local time: 12:29
Member (2006)
French to English
+ ...
Yes, tell them May 3, 2016

Yes, in the circumstances you describe, I'd politely tell the PM that you can't accept any more work from them until your existing invoices have been paid. The longer the time before payment is "due" (according to their terms), the greater the risk that they may go into liquidation without warning. It's wise to practice a degree of credit control (the amount you allow your customers to owe you), especially with a new customer or one whose payment practices seem a little wobbly.
Best wishes.


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Romina Navarro
Argentina
Local time: 09:29
English to Spanish
You should not be afraid of scaring them... May 3, 2016

...they should be afraid of scaring translators, because they NEED them.

For starters, I would never have accepted a 60-days term payment, and I would also have checked all the references about the agency before starting to work with them.

Anyway, you already have, so now you should act in consequence. When should you receive your first payment?

I think it's not necessary to mention the bad references you have received about them, but you can say the rest. You can add that you had to take projects from other clients who pay in advance or in less than 30 days because you need a better payment term, so you have an excuse to stop working for them now because you are giving priority to those who pay before.

Anyway, if they refuse to improve the terms, it is better to "lose" these clients than risking losing more money. Actually, there's nothing good to lose here. There's nothing fruitful in a 60-days (or more) payment term.

Romina Navarro
www.navarrotraducciones.com.ar

[Edited at 2016-05-03 17:31 GMT]


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Sheila Wilson  Identity Verified
Spain
Local time: 12:29
Member (2007)
English
+ ...
Every business should limit its risks May 3, 2016

Roman Lutz wrote:
Does it seem a good idea to suspend the collaboration by telling the PMs something along the lines of "According to my research, your company has a history of late payment/non-payment; please understand that I do not want to take any risks in this regard. Therefore, I cannot accept any further projects until my first few invoices have been paid timely and in full. After I have confirmed reliable payment on your side, I will be happy to continue this working relationship on a more regular and continuous basis"?

I think I'd be a little less blunt about their record - after all, you don't know the details. I'd just tell them that it's my normal policy as a sole trader never to accept a risk of over nnn amount, and only nnn amount (a smaller amount) with a new client. In this case, the agency's own terms are exacerbating the problem by only paying after such a long waiting period. You never know, it might spur them into paying more promptly.


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Roman Lutz  Identity Verified
Germany
Local time: 13:29
English to German
+ ...
TOPIC STARTER
Payment term May 4, 2016

Romix wrote:

For starters, I would never have accepted a 60-days term payment, and I would also have checked all the references about the agency before starting to work with them.

I think it's not necessary to mention the bad references you have received about them, but you can say the rest. You can add that you had to take projects from other clients who pay in advance or in less than 30 days because you need a better payment term, so you have an excuse to stop working for them now because you are giving priority to those who pay before.

Anyway, if they refuse to improve the terms, it is better to "lose" these clients than risking losing more money. Actually, there's nothing good to lose here. There's nothing fruitful in a 60-days (or more) payment term.

Romina Navarro
www.navarrotraducciones.com.ar

[Edited at 2016-05-03 17:31 GMT]


First of all, thanks for the reply.

I beg to differ about the 60-days payment term though; I know it is an illness of this industry that you are generally expected to grant your clients a loan for that long, but actually, most of my clients apply a 60-days payment term, but they pay on time and in full and the throw steady work my way. So once the cash flow has picked up, it is not that big a deal any more.


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Roman Lutz  Identity Verified
Germany
Local time: 13:29
English to German
+ ...
TOPIC STARTER
Good idea May 4, 2016

Sheila Wilson wrote:

I think I'd be a little less blunt about their record - after all, you don't know the details. I'd just tell them that it's my normal policy as a sole trader never to accept a risk of over nnn amount, and only nnn amount (a smaller amount) with a new client. In this case, the agency's own terms are exacerbating the problem by only paying after such a long waiting period. You never know, it might spur them into paying more promptly.


That is probably a good idea, I will keep that in mind, thanks!


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Roman Lutz  Identity Verified
Germany
Local time: 13:29
English to German
+ ...
TOPIC STARTER
Thanks May 4, 2016

Jenny Forbes wrote:

Yes, in the circumstances you describe, I'd politely tell the PM that you can't accept any more work from them until your existing invoices have been paid. The longer the time before payment is "due" (according to their terms), the greater the risk that they may go into liquidation without warning. It's wise to practice a degree of credit control (the amount you allow your customers to owe you), especially with a new customer or one whose payment practices seem a little wobbly.
Best wishes.


Thanks for your input, it helps a great deal.


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Georgie Scott  Identity Verified
France
Local time: 13:29
Member (2009)
French to English
+ ...
Seconded/thirded May 4, 2016

That's my standard policy for any new client. I accept one job from them and then don't accept any others until I've received the first payment. I normally don't explain that's what I'm doing but 60 days is a long time to not be available so it could be worth explaining that it's a "security measure" you employ.

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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 10:29
English to Portuguese
+ ...
Credit limits & interest rates May 4, 2016

Sheila Wilson wrote:

I think I'd be a little less blunt about their record - after all, you don't know the details. I'd just tell them that it's my normal policy as a sole trader never to accept a risk of over nnn amount, and only nnn amount (a smaller amount) with a new client. In this case, the agency's own terms are exacerbating the problem by only paying after such a long waiting period. You never know, it might spur them into paying more promptly.


Expanding on Sheila's (always good) idea, you could try to set a credit limit, considering whatever makes sense to you. Instead of suspending collaboration at any time just because you think you've done 'enough' work for them before seeing the color of their money, you can follow what any financial services - e.g. credit card - company would do.

If you set their limit as, say, $2,000, when they reach or exceed that limit, you'll suspend collaboration until they lower their amount they owe you back to the safety zone.

For instance, let's assume you've done work worth $1,800 for them. They send you another $500 job, raising the balance to $2,300, thus crossing the $2K threshold. You temporarily stop taking jobs from them. They need you, so they pay $1,000 to lower the balance to $1,300, in order to get you back on duty for them. And so on...

Eventually you may raise that threshold as you see fit. Note that this also restrains to some extent the late payment, beyond the agreed 60 days, if they really need and like your services.


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Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 13:29
Member (2005)
English to Spanish
+ ...
Suspend, but no need to give the reasons May 4, 2016

Roman Lutz wrote:
Does it seem a good idea to suspend the collaboration by telling the PMs something along the lines of "According to my research, your company has a history of late payment/non-payment; please understand that I do not want to take any risks in this regard. Therefore, I cannot accept any further projects until my first few invoices have been paid timely and in full. After I have confirmed reliable payment on your side, I will be happy to continue this working relationship on a more regular and continuous basis"?

Yes, it is a good idea not to increase the balance too much for now. However, when their PMs send bigger new jobs your way, simply say that unfortunately you cannot take care of them, with no specific reason. Once you confirm that your invoices are being paid in due time, you can again take on larger jobs.

If the customer is interesting, you want to keep doing small jobs for them during the payment period, as a way to keep the relationship alive with a limited financial risk.

One important consideration with every new customer is why they are hiring you and not their previous resource. There are genuine reasons, like an increase in work volumes, retirement of their main previous resource in your language pair, or changes in requirements/rates the previous resource will not accept, but when an agency reroutes all their work from another resource to you, there is always the risk that their payment practices are not that ideal.

[Edited at 2016-05-04 12:14 GMT]


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Charlie Bavington  Identity Verified
Local time: 12:29
French to English
In your shoes May 4, 2016

Roman Lutz wrote:
So far, I have completed two projects for this agency, nothing too big; ...


Have you invoiced this work already? If so, how long ago?

Be aware that if you have not invoiced yet, and if you date the invoice with today's date, May 4th, some agencies will count the date as = May 30th. Then add 60 days. Then add a bit for their lax attitude.....

(In contrast, if you completed the work in April, you could probably date the invoice 30 April, and 60 days should count from that date. As ever, of course, the issue is you can't really stop them counting whatever they want, from whenever they like....)

Anyway. I don't hold back from telling those with dodgy reputations that I won't work with them because they have a dodgy reputation. But that is before I do any work.

If I were in your current position, I would not say anything, because I do not think it wise to potentially antagonise people who owe me money. I would just be "unavailable" until payment was received (or otherwise). If that means being unavailable for 2 months, so be it (or, if your gut feeling is that it will be OK, by all means do a $50-100 job to keep them interested, something you could afford to lose if the worst happened).


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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 10:29
English to Portuguese
+ ...
Careful wording May 4, 2016

Charlie Bavington wrote:

... I do not think it wise to potentially antagonise people who owe me money.


That's sensible advice!

When it's an agency, I tell them that I must set credit limits to keep me in business, otherwise I'll be underwater in debt next time they need me. It conveys a professional message of "management for sustainability" on your side, inspiring respect for you not being one of those desperados (quite common in our industry) that will take ANY job, any time, pleeease!

When it's an out of the blue individual client, I've arbitrarily set my risk limit at BRL 500 (~ USD 140 now). If the cost estimate is above that, I tell them that I must SHARE (a magic word) the risk, since many individuals change their minds after the job is under way.

Potential scammers vanish immediately without saying goodbye. The serious clients are eager to pay that half, in order to get me started ASAP on their job.

After some good experience with a client, I waive this requirement. And yet when they return with another job, they are still eager to know how much is that half, so they can pay it immediately.


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Roman Lutz  Identity Verified
Germany
Local time: 13:29
English to German
+ ...
TOPIC STARTER
Thanks everyone May 12, 2016

Thanks everyone for the advice. I have told the project managers that the limit for new clients has been reached and I will be happy to accept further projects once the first payment has been made on time and in full. This appeared to be the best solution to me.

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