Pros and cons of deposits?
Thread poster: Stéphanie Denton

Stéphanie Denton  Identity Verified
United Kingdom
Local time: 07:43
French to English
+ ...
Mar 21, 2011

Hello all

I have recently had a run-in with a non-paying outsourcer, which has got me thinking about deposits. Do they hinder you getting work? How much should I ask for?

What do you think the pros and cons are?

Many thanks for your time and advice.

Stéphanie


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IrimiConsulting  Identity Verified
Sweden
Local time: 08:43
Member (2006)
English to Swedish
+ ...
No personal experience, but... Mar 21, 2011

The obvious pro: you're guaranteed at least some payment for your work.

Cons:
- Client reluctancy, could be a showstopper for new clients
- Extra startup time -- the client may need to clear the procedure with superiors, and you probably want to wait for the deposit to arrive to your account

The solution in my case is to find reliable clients, but if you have many one-off jobs from new clients I can see the reasons for asking for a deposit.

Were I a translation buyer -- and I once was -- I would require very good reasons for the deposit (low word price, high or extremely high quality, proven track record).


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Sheila Wilson  Identity Verified
Spain
Local time: 07:43
Member (2007)
English
+ ...
Depends on the client and the job Mar 21, 2011

I always ask private individuals for something upfront - anything from 10% to 100%. Nobody seems to be put off by this. The point is that they can find me but I can't easily find them.

For B2B jobs, I don't believe the idea of prepayment goes down well, although you could always try it. Apart from doing all the possible checks (ProZ BB, other similar listings, company registration records, their own website...) I prefer to limit the size of the first job, if possible. If they pay on time then you have a relationship, if they don't you haven't lost too much. Mind you, that's what I preach but I don't always practice it! I recently accepted over 23,000 words from a start-up company because it was such an interesting project and they seemed such nice guys! I suppose it was a stupid thing to do, really - but they were really nice guys, after all!icon_smile.gif


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xxxIPtranslate
Brazil
English to Dutch
+ ...
Completely agree Mar 21, 2011

Sheila Wilson wrote:

I always ask private individuals for something upfront - anything from 10% to 100%. Nobody seems to be put off by this. The point is that they can find me but I can't easily find them.

For B2B jobs, I don't believe the idea of prepayment goes down well, although you could always try it. Apart from doing all the possible checks (ProZ BB, other similar listings, company registration records, their own website...) I prefer to limit the size of the first job, if possible. If they pay on time then you have a relationship, if they don't you haven't lost too much. Mind you, that's what I preach but I don't always practice it! I recently accepted over 23,000 words from a start-up company because it was such an interesting project and they seemed such nice guys! I suppose it was a stupid thing to do, really - but they were really nice guys, after all!icon_smile.gif


Besides the fact that I agree with what you mentioned here, Sheila, I have to admit that I always like your input here: they usually show a great deal of practical sense....and the capacity to look at yourself in an objective way. After all: we all know that for a first time client, one should be careful. But who, if they care to admit, hasn't accepted a big job without taking the precautions we all know we should take, just because it was an interesting job or simply because you needed the work.....

Your reaction has drawn my attention again to this "detail" and I promise to pay more attention to it, next time the occasion arises....Well, at least I can try to do so....


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Stéphanie Denton  Identity Verified
United Kingdom
Local time: 07:43
French to English
+ ...
TOPIC STARTER
Checks Mar 21, 2011

Sheila Wilson wrote:

I always ask private individuals for something upfront - anything from 10% to 100%. Nobody seems to be put off by this. The point is that they can find me but I can't easily find them.

For B2B jobs, I don't believe the idea of prepayment goes down well, although you could always try it. Apart from doing all the possible checks (ProZ BB, other similar listings, company registration records, their own website...) I prefer to limit the size of the first job, if possible. If they pay on time then you have a relationship, if they don't you haven't lost too much. Mind you, that's what I preach but I don't always practice it! I recently accepted over 23,000 words from a start-up company because it was such an interesting project and they seemed such nice guys! I suppose it was a stupid thing to do, really - but they were really nice guys, after all!icon_smile.gif


My point exactly about them finding me easily but not vice-versa.

I did the necessary checks on ProZ and still got done over...


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Henry Hinds  Identity Verified
United States
Local time: 00:43
English to Spanish
+ ...
Did they pay? Mar 21, 2011

Sheila said:

"I recently accepted over 23,000 words from a start-up company because it was such an interesting project and they seemed such nice guys! I suppose it was a stupid thing to do, really - but they were really nice guys, after all!"

Did those really nice guys pay?


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Steven Sidore  Identity Verified
Germany
Local time: 08:43
Member (2003)
German to English
How to leverage that to your advantage Mar 22, 2011

Sheila Wilson wrote:
For B2B jobs, I don't believe the idea of prepayment goes down well, although you could always try it. Apart from doing all the possible checks (ProZ BB, other similar listings, company registration records, their own website...) I prefer to limit the size of the first job, if possible. If they pay on time then you have a relationship, if they don't you haven't lost too much.


Solid advice from Sheila. I also try to keep first assignments small (under 500 euros), and to make sure that I have no more than 2 such 'risky' receivables on my books at any one time. The thought process is that if both parties disappear into the night, I can comfortably weather the missing 1000 euros without bringing my cash flow to a screeching halt. (Your mileage may vary!)

Sheila Wilson wrote:
Mind you, that's what I preach but I don't always practice it! I recently accepted over 23,000 words from a start-up company because it was such an interesting project and they seemed such nice guys!


This isn't necessarily a bad thing, but protect yourself. I usually break my payment terms in such cases into thirds: 1/3 payment upon first partial delivery (in this case probably after 7.5k words), another 1/3 upon final delivery, final 1/3 standard 30 days net.

This serves two benefits: 1) It disarms many of the ready counter-arguments by customers, such as "We can't pay before seeing the work..." You're ensuring that they have part of the assignment in hand and can assess your quality. In my experience most customers, even new ones, accept this as a reasonable solution.

Also important: That first payment should arrive before you hand in the last delivery, so if there's a problem you have a chance to address it before the last portion of assignment is handed in. Tread carefully here, though--some clients will perceive any (!) discussion of "The first payment tranche hasn't arrived, we need to discuss the final delivery deadline" as blackmail, so take pains to be very, very neutral and objective here.

2) In response to the third/third/third schedule proposed above, some customers will say some version of the line "My accounting department won't let me do this..." Fine, but in this case you have taken the initiative and laid out the initial boundaries for discussion in a way that is advantageous to you. Much better than having to convince them to move from their position. 9 out of 10 times even these customers can be moved to a "50% upon partial delivery, 50% 30 days net" scheme, which I consider a solid win in terms of guarding myself against fraudsters. That remaining 10% of customers are politely shown the door.


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Sheila Wilson  Identity Verified
Spain
Local time: 07:43
Member (2007)
English
+ ...
@ IPtranslate Mar 22, 2011

Thanks for those kind words. It's nice to see you aren't cynical either, just careful. Let's hope neither of us get our fingers burned.icon_smile.gif

Edited to add a note to Henry: They did indeed, Henry, with promises of further work if/when it's available etc.



[Edited at 2011-03-22 12:05 GMT]


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