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Strategies for reducing the risk of non-payment
Thread poster: Dr Howard Ca (X)

Dr Howard Ca (X)  Identity Verified
Netherlands
Local time: 01:08
Italian to English
+ ...
Dec 5, 2015

Over the last few weeks I have had repeated issues with some translation agencies either not paying for completed work or paying ridiculously late. The work was very well received and no edits of any sort were required, so there were no quality issues. Before I accept work, I always check the client out via Blue Board and scam sites and make sure that my Terms + Conditions are clearly sent and agreed to by the client. I offer payment options by either bank transfer or PayPal, to give a choice to the client. Chasing invoices is a huge waste of professional time and is grossly demeaning - does anyone have any strategies for reducing the risk of late or non-payment? I tried the idea of 50% payment in advance, balance on completion, but this simply resulted in a drop in orders! I need to alter the way I accept work and payments, so any ideas would be greatly appreciated. Cam

Note: I have just seen the earlier posting about a similar topic!



[Edited at 2015-12-05 10:20 GMT]


 

Dan Lucas  Identity Verified
United Kingdom
Local time: 00:08
Member (2014)
Japanese to English
This too is business Dec 5, 2015

Dr Howard Camm wrote:
Chasing invoices is a huge waste of professional time and is grossly demeaning - does anyone have any strategies for reducing the risk of late or non-payment?

I remember auditing a company where the accountant proudly explained how he strung out creditors for as long as possible while pushing for quicker payment from suppliers to improve the firm's cash flow. Niggling, cajoling and persuading others to get better terms like this is part and parcel of doing business.

Having said that, like you I don't want to spend time on this sort of thing and so far I have avoided it. It all depends on the counterparty. Here's how I reduce my risk.

First, I only work for agencies that pay a good rate and both propose and accept a realistic deadline, my reasoning being that these are less likely to try and avoid or reduce payment.

Second, I check agencies on www.paymentpractices.net as I don't feel that glowing reviews on the Blue Board alone are a reliable indicator of trustworthiness.

Third, I compromise in other areas. I recognise that applying conditions like the two just mentioned does cut down the pool of potential agency clients, so I want to compensate for that to avoid reducing the pool too much.

For example, if I think there's a good chance that an agency could be a solid client, I am willing to do unpaid short trial translations or to accept slighly longer payment terms.

I have several very good Japanese agency clients, who track everything I do for them, send me an accurate summary at the end of the month and are never, ever late to pay. However, they each pay at the end of the month after the job is submitted, which can be up to 60 days, and each of these agencies insisted on an unpaid trial.

I took a view, accepted the trials, passed with flying colours and the rest is history. Had I not acceded to those requests for a trial translation, or had I not accepted the payment terms, I would have missed out on some very reliable customers.

Regards
Dan


 

Gabriele Demuth  Identity Verified
United Kingdom
Local time: 00:08
Member (2014)
English to German
Similar concerns lately! Dec 5, 2015

During the last two weeks I had similar concerns that threatened to affect my cash flow quite considerably, but I am not sure how to effectively reduce the risk.

But, as Dan suggested, a respectful customer who pays an adequate rate is always a good sign.

I also look closely at the agency's terms and conditions, I have read clauses that suggest that they could potentially sue me for millions, or charge 5 GBP bank & admin fee for each invoice - such terms I don't accept and I feel that this usually is just the beginning of more demands and problems.

Too much haggling about price I don't think is a good sign. I agreed to working with an agency who sends small jobs several times a month, it took quite some negotiation to make them understand that 6 words cannot be charged at a per word rate. I offered a monthly invoice which was not paid in time and when I sent a reminder, they quickly paid the invoice, but not the current one which they also have (why couldn't they just settle both) - we are talking about 90 Euros for both invoices! It makes me question whether this was worth it - but it's a contact, one never knows, see how this develops.

One of the businesses of a client appears to have gone bankrupt and I am still owed money from their non-bankrupt company, which they don't seem to want to pay. The employee I was working with was lovely and always chased my invoices, but she has left. This should have been an indication that the boss himself always needed reminding by me and his employee to settle my bills.

Previously I did not charge my minimum rate to new clients, but have now abandoned that idea because a minimum charge is what they should expect and if they chose me just because they save a couple of Pounds or Euros then I am not sure I am setting myself up for the best kind of business relationship.

I feel there are lots of little things to look out for and the general gut feeling whether to work with somebody or not, but often you can't know, e.g. some months ago I did a small job for an agency, lovely PM until the job was delivered, from then on there was silence until I threatened with a blue board entry, then they made me jump through several admin hoops and promises but nothing happened until I told them yesterday "enough is enough" - payment arrived within the hour via PayPal!? I find that strange, but I don't think I will take any more projects from them.

All this happened within the last two weeks, just before Christmas, which really is annoying!

That's my 10 pence.

[Edited at 2015-12-05 13:13 GMT]


 

LegalTransform  Identity Verified
United States
Local time: 19:08
Member (2002)
Spanish to English
+ ...
Take a look at these great ProZ articles Dec 5, 2015

http://www.proz.com/doc/3616

http://www.proz.com/doc/3613


 

Thayenga  Identity Verified
Germany
Local time: 01:08
Member (2009)
English to German
+ ...
The fine print Dec 5, 2015

Gabriele Demuth wrote:

I also look closely at the agency's terms and conditions, I have read clauses that suggest that they could potentially sue me for millions, or charge 5 GBP bank & admin fee for each invoice - such terms I don't accept and I feel that this usually is just the beginning of more demands and problems.

That's my 10 pence.


I, too, read an ageny's T & C's carefully. Just today I had to decline a collaboration offer from an agency after I read the fine print.

These included:
- payments can be reduced at the PM's sole descretion at any time without the vendor having a vote in it or an opportunity to clarify the issue.
- payment method is US $ checks only, but PayPal and bank transfere are possible at a charge of USD 10 /USD 20 resp. per invoice.
- payments are initated within 45 - 60 days after accounting has received the invoice via their platform.

In order to cover all fees and/or possible losses due to reduction of the amount owed, as well as receiving some interest on this 2 - 2 1/2 month' loan, I would have to apply a rate of at least US $ 0.35 - 0.50 per source word (minimum!), something no agency will accept.

My main strategy, however and aside from doing my homework, is to stick to my (the vendor's) terms & conditions. A serious business partner will accept them, thus signalling that s/he wants to conduct business with me on a professional level.icon_smile.gif

[Edited at 2015-12-05 14:48 GMT]


 

Gabriele Demuth  Identity Verified
United Kingdom
Local time: 00:08
Member (2014)
English to German
Also, Dec 5, 2015

The very agency that sent me 12 pages of terms and conditions in small print, who charges GBP5 per invoice and would possibly sue me for millions would not confirm that they will agree to a rate within my price range.

They asked me to sign the contract first before discussing rates ... and they asked several times.

I felt it was time to run a mile ... I don't know why I have even considered it, maybe I thought of charging them the extra 5GBP within the agreed rate, but still the gesture of that charge is just not nice.


 

Dan Lucas  Identity Verified
United Kingdom
Local time: 00:08
Member (2014)
Japanese to English
Checks? The rest of the world has moved on... Dec 5, 2015

Thayenga wrote:
- payment method is US $ checks only

When I read the word "check" in 2015 I feel that I've been flung back into the past by two or three decades. The use of checks as a standard payment method also suggests a deeply US-centric approach to business. Both would be warning signs for me - and apparently you too.

Dan


 

Preston Decker  Identity Verified
United States
Local time: 19:08
Chinese to English
But no fees! Dec 5, 2015

I actually prefer checks from US clients IF I can ascertain that the company really exists and is viable, as it's a great way of receiving payment without fees being removed by Paypal/otherthird parties. I am, however, very careful about double-checking identities, and any company that actively discusses the use of checks early in the communication process should be treated with extreme caution (because of the many check scams out there; it goes without saying that you should never agree to payment by check from anyone without a company email.

Agency clients that pay by check seem to be much rarer than direct clients paying by check.


 

Yasutomo Kanazawa  Identity Verified
Local time: 08:08
No checks, please. Dec 6, 2015

Preston Decker wrote:


I actually prefer checks from US clients IF I can ascertain that the company really exists and is viable, as it's a great way of receiving payment without fees being removed by Paypal/otherthird parties. I am, however, very careful about double-checking identities, and any company that actively discusses the use of checks early in the communication process should be treated with extreme caution (because of the many check scams out there; it goes without saying that you should never agree to payment by check from anyone without a company email.

Agency clients that pay by check seem to be much rarer than direct clients paying by check.


You seem to be located in the States, so I don't know how the check system works there, but I don't accept checks for the following reasons aside from the overpayment scam:

a) It is sent by snail mail, and it takes a few days to receive the check itself (during these few days, if the payment was made by Paypal or bank transfer, it would already have been in my account, maybe even before the check arrives).

b) I have to physcially go to the bank to cash in the check. It takes at least 10-14 days in Japan to verify if the check is genuine and cannot cash in at that point. (the bank clerk tells me that they call the issuer of the check and see if that person has really issued a check to the payee).

c) The handling charge when cashing in is more expensive than deductions made by Paypal or bank transfer.

Therefore, in my case, I don't see any advantages at all in receving checks as payment.


 

Yasutomo Kanazawa  Identity Verified
Local time: 08:08
@Thayenga Dec 6, 2015

Thayenga wrote:

Gabriele Demuth wrote:

I also look closely at the agency's terms and conditions, I have read clauses that suggest that they could potentially sue me for millions, or charge 5 GBP bank & admin fee for each invoice - such terms I don't accept and I feel that this usually is just the beginning of more demands and problems.

That's my 10 pence.


I, too, read an ageny's T & C's carefully. Just today I had to decline a collaboration offer from an agency after I read the fine print.

These included:
- payments can be reduced at the PM's sole descretion at any time without the vendor having a vote in it or an opportunity to clarify the issue.
- payment method is US $ checks only, but PayPal and bank transfere are possible at a charge of USD 10 /USD 20 resp. per invoice.
- payments are initated within 45 - 60 days after accounting has received the invoice via their platform.

In order to cover all fees and/or possible losses due to reduction of the amount owed, as well as receiving some interest on this 2 - 2 1/2 month' loan, I would have to apply a rate of at least US $ 0.35 - 0.50 per source word (minimum!), something no agency will accept.

My main strategy, however and aside from doing my homework, is to stick to my (the vendor's) terms & conditions. A serious business partner will accept them, thus signalling that s/he wants to conduct business with me on a professional level.icon_smile.gif

[Edited at 2015-12-05 14:48 GMT]



I think I know which company you're talking about. I add an extra 10 USD to my invoice in order to cover the handling charges deducted by this certain company. I haven't had any problems asking them if I could add an extra amount to cover the cost. Anyway, this is the only company I know which deducts payment for "manual labor" on their side. Very weird and clever (?) system.


 

Preston Decker  Identity Verified
United States
Local time: 19:08
Chinese to English
RE Dec 6, 2015

Yasutomo Kanazawa wrote:

Preston Decker wrote:


I actually prefer checks from US clients IF I can ascertain that the company really exists and is viable, as it's a great way of receiving payment without fees being removed by Paypal/otherthird parties. I am, however, very careful about double-checking identities, and any company that actively discusses the use of checks early in the communication process should be treated with extreme caution (because of the many check scams out there; it goes without saying that you should never agree to payment by check from anyone without a company email.

Agency clients that pay by check seem to be much rarer than direct clients paying by check.


You seem to be located in the States, so I don't know how the check system works there, but I don't accept checks for the following reasons aside from the overpayment scam:

a) It is sent by snail mail, and it takes a few days to receive the check itself (during these few days, if the payment was made by Paypal or bank transfer, it would already have been in my account, maybe even before the check arrives).

b) I have to physcially go to the bank to cash in the check. It takes at least 10-14 days in Japan to verify if the check is genuine and cannot cash in at that point. (the bank clerk tells me that they call the issuer of the check and see if that person has really issued a check to the payee).

c) The handling charge when cashing in is more expensive than deductions made by Paypal or bank transfer.

Therefore, in my case, I don't see any advantages at all in receving checks as payment.





Checks certainly wouldn't make sense in Japan then. In the US checks usually clear in one day, and without a handling fee at my bank.


 

Gabriele Demuth  Identity Verified
United Kingdom
Local time: 00:08
Member (2014)
English to German
Why ask them? Dec 6, 2015

Yasutomo Kanazawa wrote:


I think I know which company you're talking about. I add an extra 10 USD to my invoice in order to cover the handling charges deducted by this certain company. I haven't had any problems asking them if I could add an extra amount to cover the cost. Anyway, this is the only company I know which deducts payment for "manual labor" on their side. Very weird and clever (?) system.


Why would you ask them if you could add it? There may be some decent PMs working for them. I would just reflect it in the rate for the project - they don't need to know.

I just feel that this is one of many things (e.g. long complicated contracts, demanding and prescriptive language in their communication, lengthy tests, low rates) that might give me the impression that there might be problems further down the line.

[Edited at 2015-12-06 11:29 GMT]


 

Yasutomo Kanazawa  Identity Verified
Local time: 08:08
@Gabriele To answer your question Dec 6, 2015

Gabriele Demuth wrote:

Yasutomo Kanazawa wrote:


I think I know which company you're talking about. I add an extra 10 USD to my invoice in order to cover the handling charges deducted by this certain company. I haven't had any problems asking them if I could add an extra amount to cover the cost. Anyway, this is the only company I know which deducts payment for "manual labor" on their side. Very weird and clever (?) system.


Why would you ask them if you could add it? There may be some decent PMs working for them. I would just reflect it in the rate for the project - they don't need to know.

I just feel that this is one of many things (e.g. long complicated contracts, demanding and prescriptive language in their communication, lengthy tests, low rates) that might give me the impression that there might be problems further down the line.

[Edited at 2015-12-06 11:29 GMT]


Because the PM first gives a quote (not me, something wrong at this point already, I know), and if I could agree to their quote (I usually bargain for a higher price), I tell them that your company deducts 10 USD for Paypal transfer, so I ask him/her if I could add the 10 dollars to my invoice which would be automatically deducted. That's how I get the full agreed amount from this company. But if the PM says no, I don't take the job. Very simple.


 

Dr Howard Ca (X)  Identity Verified
Netherlands
Local time: 01:08
Italian to English
+ ...
TOPIC STARTER
Show me the money! Dec 6, 2015

Over the last 12 months, I have lost 2875 EUR as a result of either late or non-payment of invoices for work, all of which was accepted and approved by clients, with no quality issues. I have had to spend literally hours sending demeaning emails to companies, all of which 'agreed' in advance to my terms + conditions for payment (30 days from invoice), sent a PO, most of which had a Blue Board rating of 4.5 + and all of which appeared to treat paying me as a favour. I am making a radical change to my terms + conditions in that I am planning to send an invoice immediately upon completion of the work, only sending a secure link to enable the documents to be downloaded AFTER I have been paid. In addition, I have taken out 'credit insurance', so that if an agency (yes, it is mostly agencies) books work and then doesn't download the documents and pay, I can claim for non-payment on that. Fortunately I have purchased software which allows me to send a highly secure link, the properties of which I can configure (for example, read but not download or edit, no screenshot, time-sensitive etc) and allow the client sight only of the document in order to request edits as required. There have been some very good articles on the PROZ site regarding this subject and I am very grateful for the input, but I feel that the only safe way is to obtain payment before delivery. From the number of hits on the topic, I can see that this is something which affects others, too. Cam




[Edited at 2015-12-06 14:57 GMT]

[Edited at 2015-12-06 14:58 GMT]

[Edited at 2015-12-06 14:58 GMT]

[Edited at 2015-12-06 15:14 GMT]


 

Sheila Wilson  Identity Verified
Spain
Local time: 00:08
Member (2007)
English
+ ...
What about missed deadlines? Dec 6, 2015

Dr Howard Camm wrote:
I am making a radical change to my terms + conditions in that I am planning to send an invoice immediately upon completion of the work, only sending a secure link to enable the documents to be downloaded AFTER I have been paid. In addition, I have taken out 'credit insurance', so that if an agency (yes, it is mostly agencies) books work and then doesn't download the documents and pay, I can claim for non-payment on that. Fortunately I have purchased software which allows me to send a highly secure link, the properties of which I can configure (for example, read but not download or edit, no screenshot, time-sensitive etc) and allow the client sight only of the document in order to request edits as required.

I imagine you're intending to inform these clients beforehand of your intention? Otherwise I would expect that practice to land you in serious breach of contract problems. A private individual may be in a position to drop everything and do an online transfer (or even run to the bank) but I hardly think a PM in a large company can arrange that. Businesses simply don't work that way. Also they'll have given their own client a deadline so just seeing the work isn't enough - they need to deliver it. PayPal isn't the answer as an annoyed client who misses a deadline will probably just ask for the return of the money - and PayPal will kindly send it back!

Over the last 12 months, I have lost 2875 EUR as a result of either late or non-payment of invoices for work, all of which was accepted and approved by clients, with no quality issues. I have had to spend literally hours sending demeaning emails to companies, all of which 'agreed' in advance to my terms + conditions for payment (30 days from invoice), sent a PO, most of which had a Blue Board rating of 4.5 + and all of which appeared to treat paying me as a favour.

That's a serious loss and hassle, so I'm not surprised you want to reduce it. I really can't think why you're having so many problems. Personally, I've only had a few minimal problems in that time, limited to one single reminder in all but two cases, one of which was a tax hassle that neither party had asked for. Some months it's all in by mid-month.

I don't want to get personal, but have you considered raising your rates? It might seem odd an odd proposition but the translators here with the lowest rates are the ones who report having the most payment problems. If you were to double your rates you might find you got better clients. And/or you could spare more time to chase themicon_smile.gif.


 
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