Liquidity Issues - Looking for Agencies with Short Payment Terms
Thread poster: Benjamin Schmitt

Benjamin Schmitt  Identity Verified
United States
Local time: 17:04
Member (2014)
English to German
+ ...
Jul 13

I've been working as a freelance EN-DE translator for almost 6 years and enjoy my work very much -- for the most part.

The one thing that keeps causing me unnecessary headaches though, is the fact that I can't seem to find agencies with good payment terms. I have early payment agreements with a few of my clients (5% discount if payment is issued within 10 days from invoice receipt), but the vast majority of my high-volume, regular clients pay 30+ days from receipt (or even from EOM).

I'm simply tired of constantly having liquidity issues even though I'm frequently working 70 - 90-hour weeks. Can any of you guys recommend quality agencies with payment terms/willingness to make special arrangements for payment within 1 - 14 days from delivery?

Thanks so much in advance!


Gabriella Vento
Nikki Scott-Despaigne
 

Gabriella Vento  Identity Verified
United States
Local time: 14:04
Member (2015)
Hungarian to English
+ ...
Totally agreed Jul 13

Dear Benjamin,
You only beat me with 15 minutes, I posted after you about this same subject, without reading your post.
I cannot agree more. Giving a discount for early payment looks, like a good idea, I never thought of it.


 

Kevin Fulton  Identity Verified
United States
Local time: 17:04
German to English
Terms are extending, not shortening Jul 13

The hard reality is that translators are at the bottom of the food chain – we get paid after all the other agency's bills are paid. Losing a translator is less painful than having the electricity shut off, for example.

Nowadays, no matter the industry, companies are extending their payment terms. This has an effect all down the supply chain. The automotive industry is among the worst offenders in this regard. If an agency's client is an automotive supplier, for example, that parts supplier has to wait up to 120 days for payment from e.g. General Motors. A translation agency providing services to that parts supplier may have to wait a corresponding period for payment. Even a well-capitalized agency will be hard-pressed to pay translators in less than 30 days, even assuming it has a regular income flow.

Another issue has to do with an agency's workflow / payment cycle. Mabel with the green eyeshade in bookkeeping doesn't care what your payment terms are – she (or Fred, as the case may be) follows company procedure to pay 30/45 days from the end of the month; thus all invoices received that month are processed at the same time. For efficiency reasons this makes sense.

That said, there probably are agencies that pay relatively promptly (2 weeks or less), but they are rare.


 

Benjamin Schmitt  Identity Verified
United States
Local time: 17:04
Member (2014)
English to German
+ ...
TOPIC STARTER
Glad (and sorry) to hear I'm not the only one Jul 13

Hey Gabriella,

Wow, what a coincidenceicon_biggrin.gif

Then again, not that unlikely after all, seeing how many of us seem to be suffering from the state of payment terms in this industry. I've had agencies offering payment terms of 90 days from cumulative invoice receipt (EOM), so effectively up to 120 from delivery (needless to say, I've been refusing such offers).

I generally offer the early payment agreement to all my clients, but only a handful (are able to?) accept. Most of them say they are unable to, seeing how their clients' payment terms dictate theirs, but it seems like a chicken-egg problem to me. I really think that we as translators need to start collectively pushing for shorter payment terms wherever possible. It can't be that I have to pay my rent in advance on the first of the month but get paid months later for my work, which I usually perform under very short deadlines.

This is the only serious pain point I have in my work, but it's becoming such a nuisance that I find myself beginning to look for alternatives.


 

Kay-Viktor Stegemann
Germany
Local time: 23:04
Member (2016)
English to German
Liquidity issues? Jul 13

Benjamin Schmitt wrote:

I've been working as a freelance EN-DE translator for almost 6 years and enjoy my work very much -- for the most part.

The one thing that keeps causing me unnecessary headaches though, is the fact that I can't seem to find agencies with good payment terms. I have early payment agreements with a few of my clients (5% discount if payment is issued within 10 days from invoice receipt), but the vast majority of my high-volume, regular clients pay 30+ days from receipt (or even from EOM).

I'm simply tired of constantly having liquidity issues even though I'm frequently working 70 - 90-hour weeks. Can any of you guys recommend quality agencies with payment terms/willingness to make special arrangements for payment within 1 - 14 days from delivery?

Thanks so much in advance!


I agree that long payment terms are somewhat unfair, but I don't understand how this can lead to liquidity issues on your side. If the agencies do pay eventually and you are doing this job for 6 years now (and obviously you are well booked when you work long hours), you should have a sizable income regularly rolling in - only that the money you get now is money for work you did some two months ago.

Are you sure that there are not other reasons for your liquidity issues (for example, that you are simply charging too low rates)? With so many working hours a week, if your rates are calculated for a halfways decent hourly rate, you should be able to save a good part of your monthly income and thus never have liquidity issues.

Don't get me wrong, I think that payment terms should be appropriate, but as a businessperson you have to cope with long payment terms, and with unforeseen events like payment defaults, serious illness and other risks, and therefore you need a certain reserve fund. You cannot calculate like an employee with a regular paycheck. And short payment terms don't improve your overall calculation.


missdutch
Jean Dimitriadis
Vi Pukite
Dan Lucas
Kevin Fulton
Matthias Eng
Rachel Waddington
 

DZiW
Ukraine
English to Russian
+ ...
go direct by removing go-betweens and state your terms Jul 13

I mostly work with local direct clients, yet I think:

* First, working with middlemen a translator has to tolerate (1) an agency preferences/terms and (2) an end-client preferences/terms.

* Second, some translators seem to be twice-shy about their own preferences/terms, when it's often enough to state and negotiate very their terms.

* Third. if one wants an almost-ideal agency, why not become one?

Cheers)


 

Dan Lucas  Identity Verified
United Kingdom
Local time: 22:04
Member (2014)
Japanese to English
Shouldn't be a liquidity issue...? Jul 13

Kay-Viktor Stegemann wrote:
Benjamin Schmitt wrote:
I'm simply tired of constantly having liquidity issues even though I'm frequently working 70 - 90-hour weeks.

I agree that long payment terms are somewhat unfair, but I don't understand how this can lead to liquidity issues on your side. If the agencies do pay eventually and you are doing this job for 6 years now (and obviously you are well booked when you work long hours), you should have a sizable income regularly rolling in - only that the money you get now is money for work you did some two months ago.

I was thinking the same thing as Kay-Viktor. They may be irritating, but long payments - should I choose to accept them - don't really affect me. If you're working 70 hours a week for the equivalent of $30 an hour (and hopefully much more, but surely at least that) then you're on around $8,000 a month. That should be a comfortable income. It certainly is where I live.

Dan


 

Nikki Scott-Despaigne  Identity Verified
Local time: 23:04
French to English
It depends Jul 14

I hate lengthy payment terms too. 60 days EOM is fairly standard in France, although legislation has improved, old habits die hard. Further, as already pointed out, ceasing to work with a client offering such terms can make a difference to you, but will not change the way the agency works as there is no shortage of translators waiting in line. You can choose not to work with these clients, or adjust your practices and procedures to allow for it.

If you work on a regular basis with a number of clients who work this way, once the ball gets rolling, you can ensure a reasonable turnover. There are risks, however. You must avoid being dependent on just one or two clients. If they fail to provide sufficient work for a month or two and there are no other clients on your list, then you suddenly have a couple of months where your income plummets. Even if you have a number of clients this can happen. Conclusion number 1: you are running a business. You need to make sure you have sufficient reserves to cover this type of event. Easier said than done, perhaps, but it remains true, nevertheless.

If you rely on agencies with 60-day EOM payment terms, having regular direct clients can offset the risk set out above. It is generally easier to impose your own payment terms, upon receipt of invoice, for example. Conclusion number 2: don't put all you eggs in one basket. Again, easier said than done, etc.

The major risk is if a client on 60-day payment terms pays late, has genuine cashflow problems or actually goes out of business, then you may not be aware of that until over two months after the work has been supplied. It means you have lost two months in which you might have been able to react. That happened twice to me in the first 5-8 years and I was unable to recover the funds outstanding as the clients had had the time to go belly up. I learnt from that experience to be much more reactive, to formalise recovery procedures systematically. I also improved my verification procedures before taking on work with new clients and reduced risk of suffering an aftermath by requiring 30% upfront in specific cases and above a certain amount, even with excellent clients. Guess what? A 30% deposit is never really a problem with the good clients.

Overdraft facilities can come in handy, but should not be a way of covering your day-to-day expenses when a client pays late. OD should be for unforseen events and exceptional circumstances. When you are running a business, late payment and bad debts are, unfortunately, events that can occur. Do everything you can to avoid them but adopting sound practices from start to finish and that also means not accepting payment terms you cannot afford. It's part of the experience of running a business. On this learning curve, I first decided not to accept terms I could not afford to cover and common sense finally brought me round to not accepting terms I did not want to cover; there's a difference.

[Edited at 2018-07-14 15:24 GMT]


Zeineb Nalouti
 

Michael Newton  Identity Verified
United States
Local time: 17:04
Member (2003)
Japanese to English
+ ...
Short payment terms Jul 14

Wean yourself from agencies and look for direct clients.

 

Sheila Wilson  Identity Verified
Spain
Local time: 22:04
Member (2007)
English
+ ...
A major risk of non-payment Jul 14

I also don't see why there should be any problem month on month after the first few months, as long as they pay on time. But in my experience more companies with long payment terms have financial problems than those with 30-day payment periods. Companies who can't/won't pay until 60+days are living on the edge, probably relying on receiving payment from their clients at 30 days so they can afford to pay their suppliers at 60 days. If just a couple of their clients pay late then they're straight into cash-flow problems. A few months of that and they're risking bankruptcy. But of course they aren't going to tell their suppliers that! Their suppliers won't have any idea for another 2-3 months at best. Then they might complain. But many will keep working and adding to their stake in the company. That's where the risk is.

The moral:
Decide how much credit you can allow any company. And then stick to it! If that means refusing work until all bills are settled, so be it.


 

Edward Potter  Identity Verified
Spain
Local time: 23:04
Member (2003)
Spanish to English
+ ...
You can stop working for them Jul 14

Sheila Wilson wrote:
If that means refusing work until all bills are settled, so be it.


Exactly. Just stop accepting work from companies until they meet your terms. But that might be a bit on the strict side.

I think most of us can live with these late payers who pay. I'm not sure what we can do in the short term to get them to pay faster. Meanwhile, we can raise our rates to offset their lateness.


 


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