Payment terms - Freelancers go 2nd class?
Thread poster: Paul Kozelka

Paul Kozelka  Identity Verified
Local time: 20:32
Member (2004)
French to English
+ ...
Nov 24, 2008

After translating myriad contracts containing lengthy clauses about rates indexed to inflation or fines and interest for late payments, and more recently watching the dear ol' US dollar drop 30% against the Euro while I wait for 60-day payments, it occurred to me that the nature of the freelance business ends up making us 2nd class citizens. One aspect, thoroughly discussed already in these forums, it having to assume the cost of payment sites/transfers, the only 'possible' solution to which is, er, raising your rates to cover the charges. Another aspect that seems to have gotten less attention is the term of payment.

While most of my very best clients are agencies based in France and I find myself having to bow to their terms and chronic lateness (someone commented here that late payment in France is a national sport!), I do recall seeing somewhere recently that a 60-day payment period is now illegal in Europe. Although I now do enough business that I can usually set my own terms or simply turn down agencies who insist on 60 days (or more!), and have recently ditched a major 45-day client who always ended up paying in 60, the sort of "If you can't take the heat, get out of the kitchen" aspect of the freelancer business sometimes makes it hard to maintain the challenge, and the exchange rate can change a lot in that time period. Anyone have a useful suggestion?


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Samuel Murray  Identity Verified
Netherlands
Local time: 20:32
Member (2006)
English to Afrikaans
+ ...
Suggestion for what? Nov 24, 2008

Paul Kozelka wrote:
Anyone have a useful suggestion?


What would you like to achieve?


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Ralf Lemster  Identity Verified
Germany
Local time: 20:32
English to German
+ ...
Dollar has strengthened recently Nov 24, 2008

Hi Paul,

and more recently watching the dear ol' US dollar drop 30% against the Euro while I wait for 60-day payments,

The most recent move was a weakening euro, which fell from USD 1.55 to around 1.25.

I do recall seeing somewhere recently that a 60-day payment period is now illegal in Europe.

That is a common misconception, but it is not true.
The relevant directive stipulates that if no specific terms are agreed upon, payment is required within 30 days of the service being rendered, but if the parties agree upon 60 days, that's perfectly legal.


the sort of "If you can't take the heat, get out of the kitchen" aspect of the freelancer business sometimes makes it hard to maintain the challenge,

But this is what running an independent business is all about.

and the exchange rate can change a lot in that time period.

Certainly - and this is one of the key reasons for rejecting anything beyond 30 days (the other important factor is creditworthiness - asking yourself whether your client will still be around in 60 or 90 days is a very relevant question).

If you can predict your foreign currency inflows with sufficient reliability, talk to your bank about an exchange rate hedge.

Best regards,
Ralf


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Lori Cirefice  Identity Verified
France
Local time: 20:32
French to English
thanks Nov 24, 2008

Ralf Lemster wrote:


I do recall seeing somewhere recently that a 60-day payment period is now illegal in Europe.

That is a common misconception, but it is not true.
The relevant directive stipulates that if no specific terms are agreed upon, payment is required within 30 days of the service being rendered, but if the parties agree upon 60 days, that's perfectly legal.



Thanks for mentioning that Ralf.


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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 16:32
English to Portuguese
+ ...
This has been discussed over and over again Nov 24, 2008

Why do agencies/clients hire translators to bay in 45, 60, or more days?

For one very simple reason: Because there are translators who are foolish enough to lend them money at no interest whatsoever.

If every translator in the world made a personal commitment to him/herself: I shall not take any job whatsoever to be paid more than 30 days after delivery and kept it, the situation would change rapidly. After such an outsourcer posts a job with the 45 or 60-day payment term and gets no bids at all, they'll change their policies... or business activity altogether; find another scam.

Most translation jobs in the world are prepaid, in whole or in part, or at least paid on delivery, as they are non-returnable goods. Translations are not like a piece of furniture or an appliance that can be put back in the store for sale.

So these 45/60-day payers are most likely not living on the income from their work, but on the cash flow generated from receiving now (for someone eles's work) and paying later. If even after this long time has elapsed they don't pay, it is a signal that they have either been overspending lately, or that their income has been declining.

Just say no! to any job with payment beyond 30 days, though two weeks is quite adequate... and your life will improve, at least financially.


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Astrid Elke Witte  Identity Verified
Germany
Local time: 20:32
Member (2002)
German to English
+ ...
Yes, I only found that out very recently Nov 24, 2008

José Henrique Lamensdorf wrote:

Most translation jobs in the world are prepaid, in whole or in part, or at least paid on delivery, as they are non-returnable goods. Translations are not like a piece of furniture or an appliance that can be put back in the store for sale.



While waiting for the overdue payment from a new agency client to come in, I took a look at the agency's web site for the first time and found there a statement that they would only send the translation to the translator after they had received payment in full, so, if the job was urgent, the payment would have to be got to them very urgently first.

I was somewhat surprised, as I did not realise it was possible for them to do that and still have any customers.

Astrid


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RobinB  Identity Verified
Germany
Local time: 20:32
German to English
Really? Nov 24, 2008

José Henrique Lamensdorf wrote: Most translation jobs in the world are prepaid, in whole or in part, or at least paid on delivery,


Wow, that's news to me, and I imagine to almost everybody else in the industry. Of course, translators and companies servicing walk-in retail customer business no doubt do get paid on the nail. But here in Europe at least, direct work for corporates, banks, law and consulting firms, etc., is generally paid on standard terms of 30 days or more. Some pay more quickly, of course, and larger jobs may be covered by progress payments. But standard jobs (say, 100 pages/3,000 lines or less) are generally settled 30 to 60 days net. And in the current economic climate, a growing number of corporates are stretching their payment terms. Annoying, certainly, but understandable in industries that are closing plants (temporarily or permanently), putting employees onto short-time work, negotiating pay freezes (at least in real terms) with the unions, and so on.

Do we need a reality check?

Robin


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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 16:32
English to Portuguese
+ ...
Some exceptions - both ways Nov 25, 2008

When the translator and/or translation agency have a constant flow of work from a client that is doing international business all the time, it is convenient to have a permanent account, which is periodically closed on a certain day of the month. With this continuous workflow, it's a matter of courtesy to the end client to give them some slack in payment.

However for that client that hops in with a translation job, especially if they e-hop in from thousands of miles away via www, it's absolutely normal for an agency to request payment in advance. Otherwise, when they are about to deliver it, the client may say "Forget it! I found someone next door who could do it cheaper. He delivered it day before yesterday. Sorry I didn't get a chance to tell you about it sooner. What will they do? Grab a plane and go "there" to beat the **** out of him? Nope. They prefer to have their teeth pulled, in order not to have to bite the bullet.

So they'll take Visa, MC, PayPal, whatever... in advance! That should cover paying the translator and their profit. If the job is cancelled, sorry, pal, no refunds. House policy.

For considerably large jobs, when the deal is directly between end-client and translator, it is normal to have the client paying the translator an up-front retainer, to make sure s/he won't starve, nor have his/her electricity cut off for not having paid the bill, before having done a significant part of it, when another interim payment may take place.

There is no standard practice. Last week I had a rush same-day first job from an unknown translation agency, who paid me on PayPal within 50 minutes after delivery. On the other hand, I got involved with a huuuuge translation agency who has been stalling my payment for almost half a year, not because they need my money, but because their accounts payable department seems to be run run by Groucho, Harpo and Chico, with equipment, systems and procedures from their days.

Some translation agencies - those that live on translator-owed cash - are doing their best to extend payment terms as far as the market will bear. If they fail to find a translator willing to be paid within 6 months, they'll try 5, and so on. The professional ones want to have their translators ready and willing whenever they call, so they pay as quickly as they can.

Meanwhile, end-clients are totally unaware of what happens backstage.


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Paul Kozelka  Identity Verified
Local time: 20:32
Member (2004)
French to English
+ ...
TOPIC STARTER
Reality check, indeed... Nov 25, 2008

Special thanks to Ralf for his sober, factual clarifications, and to everyone else for their input. As a 'Medusa' style forum topic, this one is probably second only to "How do I collect from non-payers?" In a business where it's clearly a buyer's market and there are clearly many translators who are willing to wait, there seems to be no easy or collective solution. The current world economic crisis will very likely make things worse, although I suspect the "What can they be doing holding on to my money for so long?" question that inevitably arises is inherent to the freelancing business (and others) dating back to Antiquity. My interest in making my posting was to see what other people's experience and thoughts on the matter were.

I tend to give a big preference to those clients who at least promise to pay in 30 days, try to avoid those who forthrightly state 45 or 60, and have begun to weed out even major clients who just can't seem to take payment deadlines as seriously as they take translation delivery deadlines. The sooner we can all convince people that freelancing, for many, is a real profession - through efforts such as ProZ's laudable certification-type measures - and that freelancing is not something we do in our spare time because we find it interesting, the sooner we will resolve some of these thorny problems.


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