New EU payment guidelines (mandatory)
Thread poster: Woodstock

Woodstock  Identity Verified
Germany
Local time: 00:01
German to English
+ ...
Jan 25, 2011

As I understand it, the policy requires uniform 30-day payment terms across the EU, with a late fee of EUR 40 and 8% of the balance due - quite a stiff penalty.

I'm not sure when this came into effect, but I hadn't heard about it prior to reading about it this morning (in German) at
http://wirtschaft.t-online.de/eu-richtlinie-macht-schluss-mit-zahlungsverzug/id_44113294/index
and thought it might be good to post it for those who are unaware of it, as I was.
Some info from an English source:
http://www.creditman.co.uk/uk/members/news-view.asp?)newsviewID=12545
"As the European Parliament passes legislation on mandatory payment terms across the EU, leading trade credit insurer Atradius has published a survey of almost 4000 businesses and their feelings on mandatory terms coming into effect... The legislation, which still requires today’s approval from the full European Parliament, would tighten current EU late payment legislation."

For more information in your language, just google "EU payment terms"

This is very good news for a lot of translators, particularly those working with countries that have incredibly long payment deadlines, like 60 or even an unbelievable 90 days! (Italy, I'm looking at you!). Small companies (that's us, usually!) suffer most when the payments are slow, so it's really good news that the EU is toughening up the laws about payments and late penalties.

I'm very fortunate that it's not such an issue for me, but I'm glad that fellow translators affected adversely by poor payment practices will now have some recourse available to them to speed up and / or collect late (or non-)payments.

[Edited at 2011-01-25 08:53 GMT]

Added: Here is a bit more, but it says something a bit different from what I originally read. Probably best to read the Directive itself, which I will do in the course of the day.
"Late Payments: commerce keeps freedom to negotiate payment terms

Brussels, 20 October 2010 - Under the Late Payments Directive, adopted today in the European Parliament, the commerce sector will maintain the freedom to agree on flexible payment terms with suppliers. EuroCommerce welcomes the plenary vote and applauds MEPs’ decision to preserve this essential contractual freedom.

"In the current economic climate," commented Xavier Durieu, EuroCommerce Secretary General, "when SMEs are being squeezed to the limit in terms of access to finance from banks, flexible payment terms are of vital importance."

Parliament was initially inclined to set a cap of 30 days as the maximum payment period for businesses to business transactions. As EuroCommerce forcefully pointed out, this would have been disastrous for commerce, where supplier credit, in the form of extended payment terms, provides a necessary mechanism for the management of stock. Terms for payment are also an important element in retailers' negotiations with their suppliers.

EuroCommerce also welcomes the stricter payment rules for public authorities in the new directive. Public bodies will be obliged to pay creditors within 30 days or, in exceptional circumstances, within 60 days. This is a real step forward, as two out of three delayed and late payments are caused by public authorities.

In addition, the interest rates to which creditors are entitled in cases of late payment will be tightened. Creditors will be entitled to reimbursement and administration costs up to a fixed amount of 40 euros.

After formal ratification by the Council expected at the end of this month, the Directive will be published in the Official Journal. The legislation must come into force in member states by 2012. The new legislation replaces the Directive on Combating Late Payments in Commercial Transactions, which dates from 2000."
From: http://www.eurocommerce.be/content.aspx?PageId=41917


[Edited at 2011-01-25 09:09 GMT]


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Williamson  Identity Verified
United Kingdom
Local time: 23:01
Flemish to English
+ ...
What are words worth? Jan 25, 2011

The E.U. may issue guidelines, but in some parts of the translation industry, these are just words on paper, even if they have been transposed in national laws. Old French and Italian habits will not change overnight, E.U.-guidelines or not. The Old Guideline on payments has been law in all E.U.-countries for at least 6 years, but in the translation industry some agencies (in those countries) still didn't/don't get it. Just take a look at the job-offers from the countries you mention and what happens in reality. With regard to payment, it is still "la dolce vita".

[Edited at 2011-01-25 08:49 GMT]


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Yasutomo Kanazawa  Identity Verified
Local time: 07:01
Member (2005)
English to Japanese
+ ...
Great news to hear Jan 25, 2011

But if possible, why don't they make the payment terms "on the spot" just like any grocery stores or gas stations where you get paid/or pay in exchange for your services? Or am I aiming too high?

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Dr. Matthias Schauen  Identity Verified
Germany
Local time: 00:01
Member
English to German
Companies can pay within 60 days, if the contract says so Jan 25, 2011

Eine Ausweitung der Zahlungsfrist auf 60 Tage ist nur möglich, wenn sie vertraglich festgehalten wird. (from the first link.: [The payment terms can only be expanded to 60 days if agreed by contract.])

This means that not a lot will change for us freelancers working with agencies. At least from my experience, the payment terms are always fixed in a written agreement with the agencies.

And if the contract also says that we should only write out one invoice per month, the effective time from delivery to payment can still be 60-90 days.

[Edited at 2011-01-25 09:14 GMT]


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Simone Linke  Identity Verified
Germany
Local time: 00:01
Member (2009)
English to German
+ ...
Source of the problem Jan 25, 2011

The problem doesn't lie with the contract or with the agency or with the EU law but with the fact that too many freelancers accept all terms and conditions because they apparently think they have to.

Just recently, an agency wanted to work with me and sent me all kinds of paperwork that basically would have turned me into their employee without any employee benefits.

Amonst other things, it included payment terms of 45 days (and invoices were to be sent at the end of the month only). I politely declined and told them my terms.

The response I got?

"Well, you see, we're working with a lot of freelancers and they all agreed to our terms and are happy with them. I don't think we will be able to change our terms for you."

No comment.


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Woodstock  Identity Verified
Germany
Local time: 00:01
German to English
+ ...
TOPIC STARTER
My point is Jan 25, 2011

that you now have a legal basis for not accepting such long payment terms and for charging certain late fees. It's entirely up to you whether or not you are willing to acquiesce to such terms. I - for one - am not, but that's me. And in any case, I do not work with countries where these terms are the norm rather than the exception, because I think it's wrong that tiny one-person or small businesses have to accept ridiculously long payment terms.

The other good thing about this is that agencies who are notorious late payers can start getting charged healthy penalties, which might encourage them to start paying their translators more punctually.

As I said, neither of these particularly applies to me, but may be useful to others.


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Woodstock  Identity Verified
Germany
Local time: 00:01
German to English
+ ...
TOPIC STARTER
No need to accept disagreeable terms Jan 25, 2011

Simone Linke wrote:

The problem doesn't lie with the contract or with the agency or with the EU law but with the fact that too many freelancers accept all terms and conditions because they apparently think they have to.


Saw this just after posting my last comment. You are quite right, which dovetails nicely with my point of view.


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Laurent KRAULAND  Identity Verified
France
Local time: 00:01
French to German
+ ...
This is why... Jan 25, 2011

I have dumped some agency customers (in alphabetical order: Belgium, Italy, The Netherlands) and have no intention at all of quoting for many, many jobs posted here and elsewhere - and I won't mention the issue of low rates, of course.

My policy in this matter is quite clear: One strike and you are out.


Dr. Matthias Schauen wrote:

Eine Ausweitung der Zahlungsfrist auf 60 Tage ist nur möglich, wenn sie vertraglich festgehalten wird. (from the first link.: [The payment terms can only be expanded to 60 days if agreed by contract.])

This means that not a lot will change for us freelancers working with agencies. At least from my experience, the payment terms are always fixed in a written agreement with the agencies.

And if the contract also says that we should only write out one invoice per month, the effective time from delivery to payment can still be 60-90 days.


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Williamson  Identity Verified
United Kingdom
Local time: 23:01
Flemish to English
+ ...
Steer away from Italian offers. Jan 25, 2011

When I see an offer from Italy, I don't even bother to read it. Italy equals low rates and late payments. Why bother to quote. Once bitten (payment after 136 days at 0.07 eurocent p.w.), twice shy.

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Sheila Wilson  Identity Verified
Spain
Local time: 23:01
Member (2007)
English
+ ...
Things seem to be getting better in France Jan 25, 2011

Simone Linke wrote:
an agency wanted ....... payment terms of 45 days.

I politely declined and told them my terms.

The response I got?

"Well, you see, we're working with a lot of freelancers and they all agreed to our terms and are happy with them. I don't think we will be able to change our terms for you."


You were right, IMO, to stick to your terms and I completely agree that we (as businesses, however small) must dictate OUR terms, or rather negotiate with clients to find mutually-agreeable terms. We do NOT have to sign their contracts meekly as some seem to think. That strips us of our independence and, as you rightly say, leaves us in a worse position than employees.

In actual fact, I have seen a marked improvement during the last few years in France. I have recently received payments (for training rather than translating but I don't see why there should be a difference) within 30 days from state-run institutions, whereas I always had to wait at least three months when I started training 12 years ago.

That is inspiring confidence all round and having a knock-on effect in the private sector. One private company, whose main clients are in the public sector, used to pay me late every month because of the uncertainty in their cashflow situation - now they normally pay without those awful reminders that cause tension between the parties.


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Zoltán Kulcsár  Identity Verified
Local time: 00:01
English to Hungarian
not really Jan 25, 2011

Simone Linke wrote:

The problem doesn't lie with the contract or with the agency or with the EU law but with the fact that too many freelancers accept all terms and conditions because they apparently think they have to.


The guidelines (and the laws that should adopt it) apply regardless of the terms stipulated in any contract. And the 60 day exception virtually applies only to special (e.g. public healthcare) cases


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