Posted by: patenttranslator | January 23, 2013

How Many Weeks Are There in “30 Days Net”?

My calculator tells me that a year has 52.177 weeks and an average month with 30 days has 4.285 weeks in it. But as every freelance translator who puts the customary payment term of “30 days net” on an invoice knows, we are usually lucky when we get paid in 5 or 6 weeks – those are the clients who we consider to pay more or less on time. I noticed that up to 8 weeks is quite common these days too, regardless of what is on my invoice.

The accounting term “30 days net” these days often means that after we have extended credit at no cost to a client for 30 days, the client will start thinking in about 30 days about whether it is time already to start thinking about whether and how to pay us. This means that according to the accounting calendar of many, although not all, companies who use our services, there are about 7 weeks in 30 days, based on the following mathematical formula which is frequently used for accounting purposes in North America and elsewhere:

7 days x 7 weeks = 30 days                                            (Formula 1)

Is there anything that we can do about it?

Well, it depends on who our customers are, how badly we need the business of customers who happen to be slow payers, and how badly they need us.

1. The slowest payers are usually large corporations. Large corporations know that they can get away with just about anything these days, so their accounting departments see no need to respect the terms of a “vendor’s” invoice.

However, this is not always true because even large corporations employ individuals who will sometime respect the terms on your invoice. So it all depends on whether we can establish a good personal relationship with a decent person who may be working for a large company, and for how long such a person can survive in the corporate culture.

2. The fastest payers are usually very small operations. A tiny translation agency that has been sending me work since 1994 pays its translators immediately. I don’t know how the guy does it, but I find it very hard to say no to him, regardless of how busy I am, which is obviously why he pays so fast.

He is often under a lot of pressure to find very quickly translators who can meet pretty crazy deadlines, and he prefers to work with people that he know quite well since this is the best way to stay out of trouble when you are a translation agency. But of course, some very small operations will behave even worse than a huge corporation. So it all depends again on the character of the person who runs a small translation agency or company.

3. Private individuals usually don’t mind prepaying their orders. If it is a small amount, I make them prepay the entire cost through my PayPal account. If it is a larger amount, I usually ask for 50% in advance and the rest just prior to delivery of the translation. If somebody has a problem with this, I think that there is a very good chance that such a person would not pay at all.

It is not difficult to find a reason to refuse to pay for a translation once you already have the translation.

4. Medium-sized companies are usually somewhat flexible. I remember several occasions when the response from a small law firm to my past-due invoice reminder after 30 days was “we pay in 45 days and, unfortunately, we cannot change the accounting system that we have in place”. But when I responded by saying that I have a system in place too, and based on my system, unfortunately, I have to increase my rate first to customers who take longer than 30 days to pay ….. the firm was able to accommodate me, while a large corporation would not do that.

My reasoning for the necessary increase in the cost of my service can be expressed by Formula 2 below:

If 7 days x 7 weeks = 30 days, then the cost = regular rate + x percent,

(wherein x is a coefficient from 10 to 30 percent).                                              (Formula 2)

So it all depends not only on how badly I need their business, but also on how badly they need my services. Once the customer gets used to my translations, a medium or small law will usually find a way to pay me a little bit faster, at least for a while, before the accounting department reverts again to the old conversion of 30 days into weeks expressed by Formula (1) above.

*************

It was Ovid who said in Epistulae Ex Ponto: “Gutta cavat lapidem non vi, sed saepe cadendo” (a water drop hollows a stone not by force, but by falling often).

If most translators accept the logic of my Formula (1), without applying Formula (2) to compensate for the obvious mathematical inaccuracy of Formula (1), “30 days net” will usually equal about 50 days.

I think that what is in fact happening in the market is that the customers are aware that there are two tiers of translators: some will accept the implications of Formula (1) without a protest. In the present economic situation probably quite a few.

And some will try to apply a version of my Formula (2) in response to the faulty logic of Formula (1). I don’t know how many people will dare to do that, but I do know that once many drops have hollowed out even the hardest stone, there is a hole it and nobody can do anything about it.


Responses

  1. Hi Steve,
    I think it’s a question of improving the aerodynamics in Formula One, by increasing downforce and reducing drag. In our world, this translates into working more with heavyweight clients and dropping slow- and low-paying ones. Applying Formula Two is another option, but once you’ve announced your rate to a client, it’s hard to apply the x coefficient in your equation.
    Emma

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  2. Hi Emma:

    Well, the idea is to make the client pay on time if in return I agree not to raise the original rate.

    Sometime it does work.

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  3. Steve, this post of yours reminds me of Kevin Lossner’s “The Translator’s Serenity Prayer.”

    Kevin started with Formula 2 (God, give me… Courage to charge the things / which should be charged…) and ended with Formula 1 (Living one page at a time… so the client may be happy with this translation, / and I supremely happy with payment in net 30 days).

    http://www.translationtribulations.com/2012/11/the-translators-serenity-prayer.html

    Not a bad idea to do it the other way round, right?

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  4. Well, it sort of sounds more like Translator’s Subjugation Declaration than a Serenity Prayer to me, no offense to Kevin.

    But it all depends on how you look at things.

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  5. I wonder if you would like this song by Alla Pugacheva:

    I like where she sings,

    Мы в жизнь приходим по закону
    Всевластвущей судьбы,
    На смену тем, кто был
    И тем, кто не успел.
    Всё будет, как угодно Богу,
    И может я спою
    Всё то, что до меня
    Ушедший не допел.

    Kind of subjugation, but most people accept their fate and translators are no exceptions.

    In some cases, I accept even 45 or 60 days net.

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  6. “In some cases, I accept even 45 or 60 days net.”

    Which will be eventually in some cases stretched to 90.

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    • You see, Steve, payment terms and rates are to be determined by the relationships between the agencies (or end clients) and the translator.

      As an independent freelancer, I am the one who decides on such matters. Some may work with me with payments in advance, some in partial installments and some in 30 or 60 days, without a stretch. It all depends on my judgements on the relationships and they usually don’t miss.

      You must remember how I responded upon the unilateral stretching of payment term from 30 to 60 days done to me by an agency. My response was to raise the rate by about 30%. Had they, instead, talked with me before they changed the payment term, the raise could be substantially less. The fact that they changed it unilaterally was a sign of disrespect. It was, therefore, my duty to teach them something about “mutual respect.” I did it and they have learned. We are working pretty well with each other since then.

      We may sometimes forget that an agency consists of people also with flesh and blood. Some of them might exercise undue power over translators, while some of them can be reasonable enough to take our concerns seriously. It is always our choice to work with reasonable people who take our concerns seriously. The payment term is one of our concern and such people take it seriously.

      This is why I haven’t yet met a bad payer, not to mention a non-payer, because I make my choice, although I would omit some petty invoices.

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      • So you were already applying my Formula (2) even before I expressed it in my post, at the upper limit of coefficient x.

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      • You see, Steve, many people could mistake our writings about bad practices in translation business for “translators against agencies.” In fact, it isn’t about translators vs. agencies. The existency of translation agencies is necessary, because translators usually do not have the skill set needed for acquisition of end clients. This is why translators need correct attitude to work efficiently with agencies, while agencies need correct attitude to work efficiently with translators.

        Mutual respect is the correct attitude. However, some people do not understand that mutual respect means mutual. The functioning could then become a matter of balance of power. In such cases, we need honesty, transparency and fairness in dealing with each other. When one party hides away information, we know that there must be something wrong about the business. There we make our decision. Either we accept the asymetry of information or we quit the collaboration/cooperation.

        I usually choose the latter to avoid adversities of high risks. And I hope our younger colleagues would do the same to reduce the odds of hearing a bang of the Translator’s Roulette that those who do cyber-streetwalking are usually exposed to. Risk management is nothing that one can pay for. It must be done by oneself.

        I am sure you know from our younger days the bestseller titled “Games People Play: You Are OK, I Am OK.” I hope that our younger colleagues find the book and try to understand the functioning of games those smart guys in our industry play and start doing their own risk management, instead of depending on those pimps who coax them into buying rumors online as if they were true references for risk management.

        BTW, in the last sentence of the second strophe, Alla sings, “Никогда не клянись, не обещай, что проживёшь, как надо жизнь, взгляни судьбе в глаза.” No matter how smart we are, we have to look into the eye of the Fate. We have to accept gracefully that there are things we cannot do anything about them. The best we can do is to try to avoid adversities by noticing the signs of risk. (I quitted collaborating with an agency, because I did not agree with their way of doing business and I was safe when they went broke.) If an agency does not care about the details of doing business, it is a sign of risk. If an agency does not care about your or their clients conerns, quit doing business with them immediately. If all dilligence of this kind of risk management is done, the odds of hearing a bang will be minimal. Even when it bangs, one can bravely look into the eye of the Fate.

        Yes, I have been applying your formula 2 since I started doing business in other trades. It’s simple. Doing business is about mutual benefits. If you don’t see anything mutual and you cannot fight against it, “Run, Forrest, run!”

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  7. I’ve run into another funny payment system lately: “We pay at the end of the month following the month you do the work.” Which means, if you turn in a translation December 1st, they don’t mail the check until January 31st. Why they need that much time to pull together funds, I’ll never know. You just have to laugh! (Also, I wonder which of your formulas would work best…)

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  8. This is just an oblique way of saying “we pay in about 60 days” without having to actually say it.

    It makes a lot of sense for agencies because their customers often take longer than 30 days to pay too. This way you make sure that you will have the money to pay the translators within about 2 months or so, without really having any skin in the game because it’s not your money that is being paid to translators. In the interest of full disclosure: I have done it too to translators when I was broke, but I feel bad about it and I don’t make this principle a part of my system.

    But if translators get used to it, the payment terms will be eventually stretched to 90 days or more because that way the corporations get more out of the “float”, i.e. the time period during which credit is extended to them at no cost, by the people who do the work at the bottom of the pyramid, namely the translators.

    So it’s your choice, you can accept it, or insist on your own terms, depending on how busy you are at the moment.

    I should have added in my post about the difference between illegal aliens and translators that another difference is that illegal aliens would never agree to wait 60 days to get paid for their work, presumably because they are not stupid and also because they are in a much stronger position than some translators.

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  9. I always wondered about that convoluted language Carolyn, but Steve you hit the nail on the head in that the agency is probably attempting to soften the blow. I don’t know the answer but I feel this has to do with what you make a priority. What I’ve always wondered (and the cynical me wishes to ask the staff): would you work for this company if they told had in your contract that you would get your “monthly” salary every 1.5 to 2 months? Probably not. So why balk when I insist on NET30? My husband is baffled too, he gets paid every two weeks….

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  10. Hi Nadine:

    I just started a new system with new direct customers: I put 21 days net on my invoice, which makes it possible for me to ask about missing payment after 3 weeks.

    The result should be that I will be in fact paid in about a month.

    But I am just testing this new strategy now, I don’t know whether it will work.

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  11. […] “Thank you for your professionalism”? What the hell does that mean? I suppose it means that I am “a professional” if I don’t mind waiting for the payment 2 months instead 1 month, which is a very long time already. […]

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