Payments using invoice date or the end of the month?
Thread poster: Animus

Animus  Identity Verified
United Kingdom
Local time: 20:11
French to English
+ ...
Jul 19, 2013

Hi, I recently did some work for an Italian agency and agreed to 60 day payment terms despite not normally doing this as it was only a small job and I was looking to expand the agencies I work with. I invoiced for the job and received a PO with the same terms.

Payment is now overdue by 5 days, which I contacted them about telling them that if the invoice was not paid by a certain date they would incur fees and interest according to UK legislation. They have since sent me an email (after not having paid by the date I stated) and receiving my confirmation that fees would be charged, informing me that the invoice date is counted as the end of the month of that invoice according to Italian law and that I will receive payment at the end of the month.

Now I'm not an expert on Italian payment law, but I'd say that sounds like an excuse, or a downright lie to me. Given that 60 day payment terms are already barely acceptable, I'm not prepared to receive payment within 75 days when I only begrudgingly agreed to 60 days in the first place.

Does anyone have any suggestions regarding this, either relating to the validity of their statement, or how I can get them pay up for the work completed and possibly (though I know this may be a stretch) for the additional fees they have now incurred?

Thanks for your help!


 

Sheila Wilson  Identity Verified
Spain
Local time: 20:11
Member (2007)
English
+ ...
IMHO, it's a sign of disrespect and malpractice Jul 19, 2013

I know nothing of Italian law, but anyway this is a UK invoice, and payment must be governed by UK law. Surely that's the case, isn't it? Anyway, maybe this link will make them think again, or at least give you a slightly firmer base for a further email: http://www.mondaq.com/x/172722/Healthcare%20Food%20Drugs%20Law/Italy%20Adopts%20New%20Measures%20For%20Food%20And%20Beverage%20Sector That seems to be quite clear about "60 days from invoice date" being the absolute limit in your case, even if they go by Italian law.

Good luck in chasing them for that payment - do please try not to get away Scot free. I daresay I don't need to say yet again that it's frequently those agencies who demand longer payment periods who still fail to pay on time. And strangely enough, they are also the ones who (a) waste a lot of our time with forms, checks, tests, more forms... and (b) impose almost-impossible deadlines so that every job becomes a rush job (with no urgency surcharge, of course).icon_frown.gif

AFAIK, "end of month" is only used in cases where there is agreement that the invoice will be sent straightaway but payment will become due "30 days month end" or "60 days month end" etc. If your agreed terms were for "60 days", then the clock starts ticking at the invoice date and the alarm bells go off 60 days later.

Edited to accept that the article was only referring to the food industry - when it said "all other", I thought it meant non-food. So, not so useful but I still think they're stalling you with absolutely no legal grounds if the terms were "60 days".

[Edited at 2013-07-19 15:32 GMT]


 

Tom in London
United Kingdom
Local time: 20:11
Member (2008)
Italian to English
Consider yourself lucky Jul 19, 2013

Nicola Whyte wrote:

Hi, I recently did some work for an Italian agency and agreed to 60 day payment terms despite not normally doing this as it was only a small job and I was looking to expand the agencies I work with. I invoiced for the job and received a PO with the same terms.

Payment is now overdue by 5 days, which I contacted them about telling them that if the invoice was not paid by a certain date they would incur fees and interest according to UK legislation. They have since sent me an email (after not having paid by the date I stated) and receiving my confirmation that fees would be charged, informing me that the invoice date is counted as the end of the month of that invoice according to Italian law and that I will receive payment at the end of the month.

Now I'm not an expert on Italian payment law, but I'd say that sounds like an excuse, or a downright lie to me. Given that 60 day payment terms are already barely acceptable, I'm not prepared to receive payment within 75 days when I only begrudgingly agreed to 60 days in the first place.

Does anyone have any suggestions regarding this, either relating to the validity of their statement, or how I can get them pay up for the work completed and possibly (though I know this may be a stretch) for the additional fees they have now incurred?

Thanks for your help!


Consider yourself lucky, Nicola (they probably think you're male, since "Nicola" is "Nicholas" in Italian) - 60 days from end of month is very good for an Italian agency. I work with quite a few and the norm is 90 days. And with nearly all of them I have to remind them to pay. Since this is how most Italian agencies behave, don't blame your particular one. Just make sure they pay. And if in future you work with other Italian agencies you're likely to find that this sort of behaviour is the norm. Personally I'm used to it and so long as I do get paid (which I always do) I don't mind.


 

neilmac  Identity Verified
Spain
Local time: 21:11
Spanish to English
+ ...
See ourselves as others see us Jul 20, 2013

Tom in London wrote:


Consider yourself lucky, Nicola (they probably think you're male, since "Nicola" is "Nicholas" in Italian) - 60 days from end of month is very good for an Italian agency. I work with quite a few and the norm is 90 days. And with nearly all of them I have to remind them to pay. Since this is how most Italian agencies behave, don't blame your particular one. Just make sure they pay. And if in future you work with other Italian agencies you're likely to find that this sort of behaviour is the norm. Personally I'm used to it and so long as I do get paid (which I always do) I don't mind.


Same scenario in Spain. And outraged "angry colonel" responses like "Payment is now overdue by 5 days ... If the invoice was not paid by a certain date they would incur fees and interest according to UK legislation." are more likely to cause mirth than speed up payment.
Five days late is nothing here... 5 weeks would be more like it.... and I might even wait until it gets to 5 months before starting to worry.

Over the years working in Spain, I've come to accept that the due dates on my invoices are merely a sort of wishful thinking over here. Otherwise, I'd have gone postal on some clients donkeys ago.

[Edited at 2013-07-20 07:53 GMT]


 

Tom in London
United Kingdom
Local time: 20:11
Member (2008)
Italian to English
You're funny Jul 20, 2013

neilmac wrote:

..... outraged "angry colonel" responses like "Payment is now overdue by 5 days ... If the invoice was not paid by a certain date they would incur fees and interest according to UK legislation." are more likely to cause mirth than speed up payment


You're making me laugh. This is so true.


 

564354352 (X)  Identity Verified
Denmark
Local time: 21:11
Danish to English
+ ...
Why is it the translator that has to accept the agency's 'cultural' behaviour? Jul 20, 2013

I am horrified at the thought of translators simply accepting that 'this is just how it is in this country'. Why should translators accept the 'cultural' business behaviour of their clients rather than the clients accepting the, at least equally valid, cultural business standards of their suppliers (translators who provide a service)?

In my view, whatever terms you agree with a client (or supplier, for that matter) should be honoured. It is disgraceful for a client to simply state after the job has been done and delivered that 'oh, by the way, we will pay your bill when it suits us, have a nice day'.

In Denmark, payment terms of 7 or 14 days are not unheard of in relation to small businesses, although much longer terms can be seen in relation to larger companies.
I once worked as an in-house translator for a large production company that simply told their suppliers that from such and such a date, they would be paying all bills at 'end of month plus 90 days', take it or leave it. At the time, I was responsible for handling external translations and had to get a company exemption from these outrageous payment terms as our translation suppliers were not able to accommodate such long credits.


 

José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 16:11
English to Portuguese
+ ...
The very point Jul 20, 2013

Gitte Hovedskov, MCIL wrote:

I am horrified at the thought of translators simply accepting that 'this is just how it is in this country'. Why should translators accept the 'cultural' business behaviour of their clients rather than the clients accepting the, at least equally valid, cultural business standards of their suppliers (translators who provide a service)?


Any vendor accepting payment any time after the goods/services are delivered is, in fact, granting a loan to their clients. What justifies doing it is a completely different matter. Another matter is whether the vendor is operating on their own capital, their stock/stakeholders' (e.g. family members in case of a freelance translator), or on a loan already.

National laws on payment terms exist because in case a payment is not made on time, that country's judicial system will have to rule on penalties adopting unified criteria.

If the vendor is operating on their own capital, and wants to fund their clientele's operating capital for marketing reasons, it's their game. Stockholders will want ROI, so any money that remains outside the operation will have to yield some profit from that, otherwise they'll move their investment elsewhere. Family stakeholders will demand the comfort of a hot bath; they won't accept that after Mom and/or Dad have worked so hard, as it will take time for the client to pay, utility bills will be left unpaid until then.. And if the translator is operating on a loan, they'll have to pay interest, so they must receive at least that interest back from the client, relative to at least the time it takes to get paid.

Now, apart from local cost of living, another thing that varies from country to country is interest rates. It is noticeable on this table. While it is possible to some extent for anyone to secure a loan in a foreign country, this is not simple nor easy, and neither viable for small amounts and short terms.

So assuming that a translator pays their bills and gets loans at the stated rates in the country where they live, unless that translator is willing to finance interest-free their customers' business, they should charge the interest rates prevailing in the country where they live. Let's simplify calculations too, using these figures as absolute, leaving out spread, etc.

On that table (link above), on July 20th, 2013 both UK and Italy (= Euro Zone) have monthly interest rates at 0.5%. Let's spare my country, Brazil (8.5%/mo today), this time, and take Argentina (11.38%/mo today) for an example.

If a translator in Argentina opts out of financing their client in the Euro Zone, and is to be paid $1,000 for a job 60 days after delivery, they should charge $1,000 + (2 x 11.38% of 1,000) = $1,227.60. If their Euro client has no capital, they depend on the end-client paying in 60 days, but they are smart, they'll get a loan to pay the translator in Argentina immediately. Sixty days later, they'll have to settle that loan with what they receive from the end-client, which in the Euro Zone will be $1,000 + (2 x 0.5% of 1,000) = $1,010.00.

Bottom line is that they'll have a ($1,227.60 - $1,010.00) = $217.60 profit, simply by borrowing money, say, from a bank in the Euro Zone, and avoiding a "loan" from a translator in Argentina.

If the translator in Argentina did it right, they'd charge $1,227.60 for payment in 60 days for the $1,000.00 job. If the outsourcer in the Euro Zone did it right, they'd take that loan to pay the translator in Argentina $1,000.00 COD.

Some outsourcers have understood it, and are significantly (20%+ in the example above) increasing their profits by not taking "loans" from translators located in the "wrong" places to do it. Others still insist in abusing some translators' lack of financial perspective, and using them to finance their operation at zero interest.

It's not a matter of culture, but sheer economics instead.


 

Tom in London
United Kingdom
Local time: 20:11
Member (2008)
Italian to English
Because.... Jul 20, 2013

Gitte Hovedskov, MCIL wrote:

I am horrified at the thought of translators simply accepting that 'this is just how it is in this country'. Why should translators accept the 'cultural' business behaviour of their clients ...etc.


...because "when in Rome, do as the Romans do".


 

Branka Ramadanovic  Identity Verified
Bosnia and Herzegovina
Local time: 21:11
Member
English to Croatian
+ ...
I remember Jul 20, 2013

I had a similar case with an Italian agency, 60 days counting end of month. I thought it ridiculous in the first place and did not want to work with them. I think 60 days counting from the end of month is really horrible and I would be suspicious if such a client was serious about payment altogether, or was just kidding me when telling me they would ultimately pay. So I say, I had better have some coffee and some rest!

Branka


 

Mario Cerutti  Identity Verified
Japan
Local time: 04:11
Member
Italian to Japanese
+ ...
Same thing in Japan Jul 20, 2013

*Usually* Japanese translation companies too (but this practice is rather common in other Japanese industries as well) require you to send an invoice at month end or another arbitrary date, and pay after 60 days from the invoice date. This means that if you happen to deliver a job on the first day of the month you end up being paid after 90 days. The good thing is that they usually pay without reminders, and if you work with many of these companies your cash flow doesn't suffer too much.

Sometimes, for very large amounts they might even ask you to accept bills!


 


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