Is there a way to prevent non-payment?
Thread poster: Alexandra Goldburt
Alexandra Goldburt
Local time: 23:13
English to Russian
+ ...
Apr 26, 2008

Greetings to all my colleagues.

I have not been on ProZ for long, but I have read many postings on the forums, and I realized how incredibly lucky I have been so far. In 9 years of interpreting and translating, I only had one occasion when I was not paid at all. Yes, there very numerous instances of late payment, there were cases when I had to call and write, and then to call and write again to remind the agency of my invoice, but eventually, in all instances but one, I was paid what I was owed.

And even more incredible luck I had: that one and only instance of non-payment was an amount of under 100 US dollars. In cases of late payments, it has never been later than three months.

I was not aware of my luck, however, until I read posts on ProZ forums. Wow, what horrors! One story after another of shameless non-payment.

So, my question is – is there a way to prevent non-payment? I don’t want to become paranoid, but – should I ask for a contract and maybe even an advance payment, at least a partial one? Or will this approach backfire and I’ll loose potential clients if I am overly suspicious?

What if the company is in another country? I am in USA, and so far had only had USA clients. I know that in case on non-payment even a threat of legal action usually makes the client pay fast. But how can I start a legal action if the client is on the other side of the globe?

Recently, a company from Russia contacted me (through ATA, not through this website) and asked about my services and fees. May my compatriots forgive me for the question, but – how can I trust that company?

And what if it is a direct client? My name is on the list of certified court interpreters, and sometimes the attorneys or people who have to go to court call me and hire me directly. I have accepted many jobs this way. So far it worked out well and I was paid on the day I performed my services, but could it be that it was simply my luck? Again, I don’t want to become paranoid, but maybe I should have asked for payment in advance?

I am looking forward to your thoughts on this subject.

Respectfully,

Alexandra


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Margreet Logmans  Identity Verified
Netherlands
Local time: 08:13
English to Dutch
+ ...
No 100% guarantee Apr 26, 2008

Hi Alexandra,

I haven't had any case of non-payment sofar (3 years) and I work with clients all over the globe.
The customers you've already worked for can obviously be trusted.
With outsourcers, I always check the Blue Board (I don't work for anyone with a score below 3.9) and their details on the web (address, phone number, etc.)

Direct clients: I try to check their details, Google them to see whether they've got a website or something else that proves they are serious. If they give me a phone number, I call them (under the pretext of talking about the job and agreements). I also check the e-mail address they're using, especially if it is a Yahoo address or other free service.

There's not much more you can do. The one other preventive measure I take, is that I don't accept a large job as a first assignment. Once a small job has been paid, I trust them to pay for larger jobs as well.

But there is no 100% guarantee - it's the risk of being in business.

Good luck!
Margreet


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Philippe Etienne  Identity Verified
Spain
Local time: 08:13
Member
English to French
Payment terms Apr 26, 2008

1 non-payment in 2001, amount 3700 euros. A long-term customer agency from Paris went bankrupt. And they had a good BB record.
They also had a 60-day end of month policy, so before you realise they go bust, you have enough time to deliver quite a bit of work that is never going to be paid.

The good news for agency bosses who are unskilled enough to go bankrupt after more than 5 years of operation is that they can try again:
After a few years of silence in the industry, they open a new agency in the same town, and say well, sorry for your loss but I cannot do anything about it, it's a business risk not to be paid.
They may even offer you to work for them at their standard rate (too bad, it's lower than mine), so that you can be paid at 60-day end of month.
And since you rubbed them the wrong way when you reestablished contact with them, they put strangely irrelevant keywords in some of their ads, such as Morocco, Casablanca, Tunisia or Tunis (residence country of a colleague stripped of about the same amount as mine), or Toulouse, Lyon. I find this a kind of low-lifeform type of response...
Anyway, according to their BB record, they're a fantastic agency to work for.
End of anecdote

To limit the damage, payment terms of 30 days instead of 60 would definitely have made a difference in my case of non-payment. And no late payments accepted would have been nifty.
However far or close the client is irrelevant in cases of bankruptcy. When they go down the pan, it is for good and you usually don't get anything back after banks, personal and taxes have been paid through legal proceedings.


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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 04:13
English to Portuguese
+ ...
I have adopted mine Apr 26, 2008

It's not 100% effective, it's not guaranteed, it costs me some jobs, but it should get me rid of 80% of non-payment problems.

I don't take jobs that pay beyond 30 days.


Payment beyond 30 days too often means one or more of the following:

a) Outsourcer undergoing cash flow problems, and they want to solve it at my expense by receiving from the end client COD or in 30 days max.

b) Reoutsourced work from a Blue Board WWA = 1~2 agency, whose bad fame prevents them from hiring decent translators anywhere.

c) Outsourcer buying time to vanish and erase their tracks before the payment is due.


So far, it has been working fine.

Furthermore, it always makes me wonder why translators get paid so much later (than doctors, dentists, plumbers, electricians, etc.), since it's a service rendered, not merchandise sold. Two weeks should more than suffice for the in-between to get it neatly packaged, delivered and invoiced to the end client, for the latter to check it for adequacy and pay the former, and for the in-between to pay the translator.


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Maria Ramon  Identity Verified
United States
Local time: 01:13
Dutch to English
+ ...
How about an escrow account?... Apr 27, 2008

Maybe we, interpreters and translators, should set up an escrow account at our bank.

The client deposits X amount of money, that is approximately what the job would cost them.

The money stays in the bank till the job is done and delivered, the clients has, say, 7 days, to either complain (if he thinks we did not do a good job, and give us a chance to improve, if necessary), or accept the job as delivered and the funds will then be released, so we can get paid.

All this should be in the agreement with the client.

That would be the only way that we could get approx. 99% certainty that we will get paid.

I don't know how feasible it is, but it may be something you may want to look into, and if we ALL do that, the clients cannot complain. I will surely talk to my bank about it.

Nowadays there are too many scam artists around.


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Williamson  Identity Verified
United Kingdom
Local time: 07:13
Flemish to English
+ ...
Escrow account : Most of the agencies do not have enough money to pay their translators at once Apr 27, 2008

let alone in advance.
A good idea... which would eliminate +50% of the "agencies" on the market.
The agency market is based upon the principle of outsourcing to a translator, paying him or her as little as possible at a term of +30 days in the best cases and +90 in the worst (our customer did not pay us, or cashing in on the interest ) after seeking excuses to deduce the cost and charge the full-price to the end- customer.
Such a system of escrow account would eliminate the agencies which do not have enough cash-flow to pay for projects immediately or +30. Most of the agencies do not have enough cash-flow to pay their translators!!!

Yes, there is. I made an agency-owner, who always paid late : +60-90, rush to the bank by putting a password on the translation and enforced immediate payment. In the version of Word 2007, it is possible to lock your translation with an encrypted password so that the customer can see it, make remarks, but can not modify the text. He or she sees what he or she buys.


[Edited at 2008-04-27 09:29]


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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 04:13
English to Portuguese
+ ...
Escrow account Apr 27, 2008

Williamson wrote:
Most of the agencies do not have enough money to pay their translators at once


Theoretically, none of them does. That's the concept of agenting: they live on a percentage of what their "agentee" gets.

For instance, advertising agencies in Brazil get 15% of everything they manage and pay vendors on their client's behalf. Internal work (i.e. whatever is done within the agency, such as creation, artwork, etc.) is paid at their rates, without the 15%. But when you consider the cost of media, e.g. a 30-sec commercial on TV, or a 2-page spread in a national newspaper or magazine, they make a sizeable sum. No criticism, it's their work.

However there is no market standard for how much a translation agency can/should make on outsourced work. They sell translation work as if it were a commodity, and nobody seems to be allowed to care if they make 15% or 400% on what they pay the translator.

Quite often there is enough margin to reoutsource work, so the first agency - directly hired by the end client - makes 50% on the full price, while the last one makes 10% on what is paid to the translator who will actually do the work. By then, the amount actually paid to the translator will be getting close to negligible if compared to what the end client will spend.

Williamson wrote:
A good idea... which would eliminate +50% of the "agencies" on the market.


It would be deadly for those agencies that always need everything in a rush, for today or tomorrow, at your "best" rates, and will pay at the end of the 2nd month after delivery. Unfortunately, I'm not allowed to mention names here, especially because I have been declining one job after the other from them; actually never worked for these. I'd bet they receive COD from their end-clients.

Williamson wrote:
Such a system of escrow account would eliminate the agencies which do not have enough cash-flow to pay for projects immediately or +30. Most of the agencies do not have enough cash-flow to pay their translators!!!


IMHO agencies don't have such cash flow, but nothing prevents them from getting paid on delivery, or at most one week after that for large jobs, to let the end-client check that they got what they asked for. It shouldn't take more than another week to get the money duly credited through whatever might be the slowest banking system in the world, and pay the translator then.

If this escrow system worked, for instance, Proz and PayPal (or any other such association) would already have it set up, as it would be a very profitable, honest operation, providing a needed service.

I see it more likely that Proz (or any similar business) would get associated with some insurance company, which would in some way guarantee payment from the client (after checking them thoroughly) for a fee, and take up any collection process, if needed. This would lead to "insured translation outsourcers", which translators could require sine qua non, just as some outsourcers require specific software, certifications, references, etc.


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Williamson  Identity Verified
United Kingdom
Local time: 07:13
Flemish to English
+ ...
You could set up such a system for yourself. Apr 27, 2008

I proposed that Proz.com should set up prozcom_clearinghouse_membership_option

http://www.proz.com/forum/prozcom_suggestions/98554-the_prozcom_clearinghouse_membership_option-.html . I
I guess, it is somewhere in a very long-term Proz.com shelf.
Your idea is not bad either.

And if this site will not consider such a system : As part of their services, most banks offer an escrow system to their customers. No banking service is free, but doesn't PayPal take a hefty percentage as transfer costs. You could mention this on your profile.
I guess that this would indeed scare off a lot of "Trados required, best rate"-agencies, but then again somewhere in my mail, I have some offers from a machine-construction plant and others. No agency involved, no Trados reduction-scheme asked and payment the German way: ("Gründlich und ) Pünktlich"



[Edited at 2008-04-27 12:24]

[Edited at 2008-04-27 12:25]


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Hilde Granlund  Identity Verified
Norway
Local time: 08:13
English to Norwegian
+ ...
Magreet Apr 27, 2008

said it all, as far as I am concerned.
Very little problems with non-payment.
1. Check Blue Board
2. Only accept a small job the first time

Those are my basic rules, and so far they have worked well.


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Pradeep Mahapatra
India
Local time: 11:43
English to Oriya
+ ...
It is only Trust Apr 28, 2008

Dear Alexandra,

I have faced just 1 time nonpayment of a small job. You can not do anything except phone calls, reminders and finally you post some comments against that company/person. But, you can not get back the money for your hard work. I think, this is only trust which works in this business.

I have not fixed any price for me (I don't know, whether it is right or wrong). I always work according to the clients budget. But, still, I faced 1 non payment and 2 late payment.

They should know that we are working hard with a belief that the company/person will pay us. And, if, we will get our payment on time we will give priority to that for the next job. If, they don't pay, they are not cheating us, they are cheating themselves. Frankly, we can not do anything except the final step of posting comments against that company/person. What could you do when your client lives in the other part of the world?

So, don't worry about the gone. Remember the history and work for future.


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xxxPerereinger
Local time: 08:13
doctors, dentists, plumbers, electricians Apr 28, 2008

José Henrique Lamensdorf wrote:

Furthermore, it always makes me wonder why translators get paid so much later (than doctors, dentists, plumbers, electricians, etc.), since it's a service rendered, not merchandise sold...


Indeed and on that basis payment terms especially for new clients, ought to be: "Translation is ready, Paypal the cash and I send the work".
Know any plumber who doesn't want his money as soon as his job is done? - won't leave the house until paid either!

My experience with new customers on the other side of the world has been 50% up front and the rest in staged payments, never lost a worthwhile customer on that basis yet.

As for escrow accounts - useful if Proz were to set up such a system (at no additional cost to paying members of course!)


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Marie-Hélène Hayles  Identity Verified
Local time: 08:13
Italian to English
+ ...
Not luck at all Apr 28, 2008

Alexandra Goldburt wrote:

I have not been on ProZ for long, but I have read many postings on the forums, and I realized how incredibly lucky I have been so far. In 9 years of interpreting and translating, I only had one occasion when I was not paid at all. Yes, there very numerous instances of late payment, there were cases when I had to call and write, and then to call and write again to remind the agency of my invoice, but eventually, in all instances but one, I was paid what I was owed.

And even more incredible luck I had: that one and only instance of non-payment was an amount of under 100 US dollars. In cases of late payments, it has never been later than three months.

I was not aware of my luck, however, until I read posts on ProZ forums. Wow, what horrors! One story after another of shameless non-payment.




I don't think it's anything to do with luck that you've only had one non-payment in nine years - it's simply that the vast majority of agencies are honest. It's easy to lose sight of this on sites like Proz, but being paid is actually the norm and people don't bother to write about it (just as the papers don't tell us about the thousands of planes that land safely, but only of the handful that don't...)

So take precautions, by all means (I do myself), but I think it's both professionally and personally sensible to assume that potential clients are in good faith, unless there are any obvious warning signs.


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Alexandra Goldburt
Local time: 23:13
English to Russian
+ ...
TOPIC STARTER
My deepest thanks (a bit belated) for all my colleagues who participated in the discussion. Apr 30, 2008

It is a type of discussion where the authoritarian “last word” is not possible. Yes, check the Blue Board, but Philippe lost money with an agency with good BB record. Yes, escrow account is a good idea, but only if everybody agrees to that – I’m not sure that will happen. And while refusing big jobs from unknown agencies and those whose payment terms is anything more than 30 days, I’ll minimize my chances of not being paid, but I can also loose a potential good customer.

On the bright side, as Marie-Hélène has said, the vast majority of agencies are honest. We all would probably have to choose another profession if it were otherwise.

Happy translation to all, and may the companies we deal with be honest.

Alexandra


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Paul Lambert  Identity Verified
Sweden
Local time: 08:13
Member (2006)
Swedish to English
+ ...
If I may be so bold Jun 14, 2008

I hope you do not find me too presumptious to top off your thread after bringing it closure some time ago.

I want once more to suggest selling all your invoices to a billing company who will give you your money the same day and then assumes any risks involved. This is as close as a 100% guarantee as you will ever find. Most freelancer's are one-man businesses and we cannot waste our time chasing after deliquent accounts. True, most agencies are honest, and if so, honest agencies have no problem dealing with your billing company.


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Alexandra Goldburt
Local time: 23:13
English to Russian
+ ...
TOPIC STARTER
Not presumptuous at all Jun 14, 2008

Paul Lambert wrote:

I hope you do not find me too presumptuous to top off your thread after bringing it closure some time ago.

I want once more to suggest selling all your invoices to a billing company who will give you your money the same day and then assumes any risks involved. This is as close as a 100% guarantee as you will ever find. Most freelancer's are one-man businesses and we cannot waste our time chasing after deliquent accounts. True, most agencies are honest, and if so, honest agencies have no problem dealing with your billing company.


There is nothing presumptuous at all, Paul, in re-opening an old thread, especially if you have something to say that nobody has said yet.

Personally, however, I'm reluctant to use your approach. I value my relationship with clients based on mutual trust and goodwill, and I'm afraid that using a third person in between me and the client might harm this relationship. But if it worked for you, and if it works for somebody else - great. Ultimately, it's a personal choice whether or not to take the risk.


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