Late payments
Thread poster: Anne-Elisabeth Schweitzer

Anne-Elisabeth Schweitzer
Greece
Local time: 08:10
Member (2013)
Greek to French
+ ...
Jul 15, 2016

Dear all,

I'm writing because I'm having a problem with a regular client of mine.
I've been working with this agency located in Canada for the last 2.5 years but for the last six months, I need to put pressure to know when I get paid and it's only after I send an email reminding payment that I get paid. Until here ok... let's say...

But yesterday when I sent my email asking for April's payment, the answer was they're having problems with clients delaying payments and that they had to delay payments to some freelancers. They acknowledge though the debt and ensure they'll do their best to pay asap.

After expressing my disappointment, I decided to announce that I was interrupting the collaboration until a solution was found (till today, this agency owes me about 3000 EUR).

I wanted your opinion on this and on the next steps that can be taken if no payment is made, Knowing that I am in Greece and it's a Canadian agency...

Thanks a lot for your support.

Anne


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Vadim Kadyrov  Identity Verified
Ukraine
Local time: 08:10
Member (2011)
English to Russian
+ ...
just a few thoughts Jul 15, 2016

https://engrutra.wordpress.com/2014/08/12/non-payers-when-clients-vanish-into-thin-air/ - my experience.

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Sheila Wilson  Identity Verified
Spain
Local time: 06:10
Member (2007)
English
+ ...
You've certainly done the right thing to withdraw Jul 15, 2016

There can be no doubt about that - this is a client who cannot pay so you can't possibly risk any more. You already have quite enough tied up in his failing company. The only time you could consider more work is if he calls in the receiver. In that case, future payments would be guaranteed, but the existing debt would depend on a successful refloat. Of course, if his problems are less severe and he clears the debt then you could reconsider.

It sounds as though he is willing - and honest - just unable to pay. IMO, a non-expert opinion, you have two reasonable courses of action with this type of client.
1. You offer payment terms to clear the debt. He MUST pay something immediately, as a show of faith if nothing else. But the rest could be on a monthly basis until cleared. Make sure it's down in writing, with specific dates and amounts and his explicit agreement to the terms. Make it clear from the start that you will sue him if he doesn't stick to the agreement.
2. You contact a debt recovery company local to the client. It's a big enough sum to interest them. I believe they normally take around 30% as their fee. I don't know much more about them.

You need to keep an eye on the company's financial status. If they file for bankruptcy then there's little you can do as you'll be right at the end of the queue and agencies' assets tend to be minimal. The companies' register in Canada may well be online although you probably need to pay to see the details.

Good luck and let us know how it goes.


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Anne-Elisabeth Schweitzer
Greece
Local time: 08:10
Member (2013)
Greek to French
+ ...
TOPIC STARTER
@ Sheila and Vadim Jul 15, 2016

Thanks a lot to both for your pieces of advice.

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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 02:10
English to Portuguese
+ ...
Set credit limits Jul 15, 2016

Perhaps the fact that I was a Human Resources manager twice in my life, and for several years, led me to have everything I can covered by a "house policy".

This ensure fairness to all my clients (the goal in a big company having HR policies), and it's something that - if reasonably justified - nobody would challenge.

Among these policies, I have one on credit limits.

For instance, any e-drop-in new individual domestic client (i.e. a person who contacted me via Internet) has their credit automatically limited to BRL 500 (~USD 160 now), which is how much I'd be willing to risk.

I explain them that if their request represents more than BRL 500, I'll have to SHARE (the magic word nowadays) the risk with them, because unfortunately there are people who send me electronic files to translate, and change their minds while the job is under way, or worse, when it's finished.
So in these cases I demand 50% up front.

Potential scammers vanish immediately. The good guys quickly ask for my bank details, and deposit the 50% usually within the hour, and e-mail me proof of that.

In order not to leave it unmentioned, when these good guys return with another job, I raise my risk threshold. Unless it involves some ominous amount, though they are eager to know the full amount, in order to deposit the 50%, I tell them not to worry; they can pay me the whole amount when I deliver. This has never failed so far, and they keep coming back.


In this same policy, I have credit limits for regular clients, based on each one's past history with me. Let's say that I granted a USD 1,000 limit to one of them. If they have, for instance, USD 950 they owe me past due on account of any explanation they gave, and order, say, a USD 300 job, I'll tell them it's beyond their credit limit. They should find some way to pay me at least USD 250 (to lower their debt to USD 700, so that USD 300 won't exceed USD 1,000) before I start on it.

I had to use this policy only once. The client paid me immediately the full amount owed, to ensure they'd have me available any time they needed.


The lesson is: If your policy makes sense, nobody will challenge its logic.


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Anne-Elisabeth Schweitzer
Greece
Local time: 08:10
Member (2013)
Greek to French
+ ...
TOPIC STARTER
RE Jul 17, 2016

Thanks Jose.

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Mirko Mainardi  Identity Verified
Italy
Local time: 07:10
Member
English to Italian
+ ...
Out of curiosity Jul 17, 2016

José Henrique Lamensdorf wrote:

Perhaps the fact that I was a Human Resources manager twice in my life, and for several years, led me to have everything I can covered by a "house policy".



Are you able to "enforce" this policy with any kind of client, from small end clients to big agencies?


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Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 07:10
Member (2005)
English to Spanish
+ ...
We are not banks Jul 17, 2016

3000 EUR is way too much credit for a client who has been paying late for many months. You have been too generous so far. If the client has cash problems, they should go to a bank. If they are a viable business, banks will have no doubt in lending them money, but if banks do not lend them the money... clearly you should not finance them either.

In my 20 years in business, I have only had one case of a client who was in a real bind and proactively informed me about the situation beforehand, so that I had the option not to increase the debt. Having been an excellent payer and a reasonable client for over a decade, I was happy to help him by continuing the flow of translations. The situation was resolved after a couple of months and I was kept informed and was paid back every penny. Good payers proactively come to you and explain the situation, while bad payers keep the secret and use you by selling your translations without paying for them until their suppliers can't take it any more.


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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 02:10
English to Portuguese
+ ...
Any policy must make sense! Jul 17, 2016

Mirko Mainardi wrote:

José Henrique Lamensdorf wrote:

Perhaps the fact that I was a Human Resources manager twice in my life, and for several years, led me to have everything I can covered by a "house policy".



Are you able to "enforce" this policy with any kind of client, from small end clients to big agencies?


Every policy MUST MAKE SENSE, otherwise it will be merely something you are trying to impose upon the other party, leading to a tug-of-war competition.

One policy that could be easily challenged is one's price policy.

Whenever I'm asked about my rates, I tell them that I keep translation costs and financial costs separate, so my clients have a choice. This leads me to offering three basic rates:
  • STANDARD: USD 'X' per word, for payment via PayPal within two weeks from delivery with invoice.
  • SENSIBLE: 10% discount on "standard rate" for payment via bank transfer or P2P (Moneygram, Western Union) in two weeks (client saves on the fees PayPal deducts on my side: 6.5% in fees, and 3.5% admittedly lower-than-market currency exchange rates) .
  • SMART: 16.6% discount on "standard rate" for payment via bank transfer or P2P in two business days (client saves on hefty Brazilian interest rates, about 17%/month now).

    The important trick here is that eBay-owned PayPal strictly forbids surcharging any "buyer" for their fees, under penalty of freezing the account and having them scooping the balance. However they can't impose any penalty if their system is not at all involved in a transaction, and I'm free to give discounts to whomever I wish!

    On another front, if the client's credit is good, and they don't have enough positive cash flow now, in most countries they can get a loan under much, much lower interest rates than in Brazil, to pay me pronto, get a meaty discount, and add the difference in interest rates to their profit.


    Okay, this ends the discussion about financial costs. What if they challenge my rates?

    I tell them that I adopt carefully researched market rates, and many clients consider my rates as excellent value for what I deliver.

    They agree, but sometimes they ask for a discount. Can I give it? No!
    If I gave discounts merely because they asked for it, my initial offer would have been blatantly dishonest, according to my book: I'd be attempting to rip-off every client who lacked the chutzpah to ask me for a discount.

    If they can't afford my rates, we simply don't match. Perhaps they are trying to buy a weathered Datsun at a Lexus dealership.


    Payment terms?

    A few years ago, I took longer vacations than usual: two weeks instead of one.

    Though I kept in touch with my e-mail, I didn't do any work overseas. Upon my return, the in-box was loaded sky-high with assignments.

    One of them offered a 50% extra to be first. Another offered 80% to overtake that one. Well, I couldn't honestly waitlist a job paying 50% plus, because another one was paying a higher surcharge.

    Thinking it over, I realized that rush surcharges contributed more to havoc in my schedule than to the balance in my bank account, so I did away with them.

    I began giving first service to the shortest payment term. Later I found the beauty of it... Anyone demanding top priority would have to pay in advance, yet I would only take ONE prepaid assignment at a time, and would only let it go after I delivered it. As this MAKES SENSE (my point here), if I'm working on a prepaid job, nobody of sound mind can convince me to leave it aside, to do their job first.

    The beauty is that after one client has prepaid for the job, nobody else can time-travel to prepay for theirs earlier. For the record, this was in 2013, and ever since I've been having 2-3 prepaid jobs per year, not more than that.

    If a prospect insists that "their policy" is paying in 45, or 60 days, or these after month-end, once again it's the Datsun/BMW scenario. I explain them that it is unlikely that they'll EVER muster enough "priority" to get their job done, unless I hit a long drought season.


    I have many other such policies in place. As long as they MAKE SENSE, nobody dares to challenge them. I can't envision a client telling me that their policies (often arbitrary) make "more" sense than mine. A policy either makes sense or it doesn't!

    And I really love transparency. I'll explain the rationale of any such policy to anyone who is interested in knowing it.

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