Posted by: patenttranslator | June 6, 2013

On Payment Terms, Hatred and Other Mysteries of Life

What payment terms are translators putting on their invoices these days?

As far as I know, here in United States, “30 days net” has been the most commonly used payment term for several decades in the translation business, or  the translation industry or whatever you want to call it, at least when one deals mostly with translation agencies.

But there are some agencies who pay much faster, and quite a few that will let you wait for your money about 2 months or more. The same can be said about direct clients as well.

At this point I work only for a few agencies, but 2 agencies sending me work regularly pay me within a few days, which is why I find it difficult to say no when they have a job for me even if I am quite busy at the moment.

One is a mini agency, or rather an individual who has been sending me work for about 20 years. He pays when he receives my translation. Period. Even if the tab is several thousand dollars. I don’t know how he does it, and I don’t really care. But when he calls or e-mails, I go out of my way to fit his job in if at all possible.

Another agency that pays me within a few days must be quite big, and they seem to be doing all kinds of things in addition to translating. They pay every two weeks, which means that I usually have to wait for my money no more than about 10 days. Does that mean that other types of agencies, for example employment agencies, pay much faster than translation agencies?

I don’t know, but I think it is likely.

So it is not really true that “30 days net” is the norm when it comes to how long freelancers have to wait for their money. There is no norm. Everything depends on what kind of client you are dealing with.

I still usually put on my invoice “30 days net” if I am billing a translation agency or a patent law firm that has been sending me work for many years because I don’t think that it is a good idea to change payment terms out of the blue. About half of the patent law firms pay me within 30 days or slightly sooner, the rest of them take about 6 weeks, some 7 weeks.

Because a month is a really long time to wait for your money, as of this year I started putting “21 days” on invoices for patent law firms that I never worked for before. Some of these newly acquired customers do pay within 3 weeks, especially patent law firms abroad. Some take 4 to 6 weeks, regardless of what is on my invoice, especially law firms in US and Canada.

After I delivered my first translation of a Japanese patent about a year ago to a new customer in Australia, the lawyer who received it called to tell me how pleased he was with the translation. He told me that they were not happy with the previous supplier and that they would have more work for me. But after I politely reminded the law firm’s accounting department that 30 days was up that, they responded by saying that  “payment terms of 3 months are not unusual”. So I patiently waited for my money for 3 long months and never worked for them again.

As I said, there is no norm and everything depends on what client I am dealing with.

It has been my experience that with notable exceptions, the worst customers or customers who let me wait forever for that check are large corporate enterprises. Which is why a law firm that has hundreds or thousands of lawyers is not my ideal type of customer.

As far as I can tell, an ideal customer for me is an individual such as a sole practitioner, or a small to medium-sized patent law firm with just a few lawyers in it. The fewer people there are in such an enterprise, the more accountability one can usually expect from them, and vice versa.

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

I will end this post with an example of how shabbily I was treated as a beginning translator by a translation agency that was sending me a steady stream of Japanese patents about 25 years ago. At one point, I was owed well over three thousand dollars by the agency, (which would make it well over five thousand in today’s money taking into account inflation), for several invoices which were about between 5 to 7 weeks old.

So I called them. There was no Internet back then, they were sending me patents for translation by Federal Express and I was sending my translations printed on paper back the same way. I used to always deal with a very nice coordinator there, her name was Lidia and I really liked her.

When Lidia called the owner, he told me that the check was sent about 10 days ago. “But I have not received it”, I replied timidly. The man started yelling at me, his voice booming into my ear in my telephone receiver: “What are you insinuating?”, he said. This was the first time that somebody accused me of insinuating something. And the last time. So, trying to keep my cool, I said that I was not insinuating anything, that I just needed to get paid to pay my bills.

After the irate owner calmed down some, he said he that would check with his bank and call back. And he did. As the check obviously did not clear the bank, he told me that he would have to cancel the check, send a new one to me, this time by Federal Express, and that the bank cancellation fee and that the Federal Express fee would be subtracted from the new check.

So I agreed as I did have bills to pay, and I received the check next day by Federal Express.

A few days later, a check with the missing payment, presumably the one that I was “insinuating” I had not received, mysteriously turned up in my mail. The postmark on the envelope was about two weeks old, but since it was printed on the company’s postal machine, there was no way for me to determine when was the check really mailed.

A few days later, Lidia called with the cheerful news that she had more patents for me to translate. She seemed genuinely surprised when I told her that I would never work for her company again because I kind of did not like too much the way I was treated by her boss.

This particular translation agency owner died some time ago, but the agency is still around, and as far as I can tell, they are still looking for beginning translators who charge low rates as I did a quarter century ago (their appeals to zombie translators found their way into my mailbox as nobody at the agency knows who I am and Lidia is running her own agency now).

It makes me feel very good when I see that this translation agency’s Google ranking is quite a bit lower than mine. When I type into a search engine certain key words, namely those that I know customers who are looking for the kind of translations that I provide are using, my website usually comes up among the first listings on page 1, while this company’s website is usually on page 2 on Google and on other search engines.

25 years later, I still haven’t gotten over it.

I still hate this company.

Hatred is not a good thing … but it is what it is.

UPDATE

This morning I found out from a new direct client that my bid for a translation project was accepted by this new client over the bid of the translation agency that mistreated me long time ago as mentioned in the second part of this post although their bid was lower.

Don’t ask me how I did it, I would disclose a trade secret only under extreme torture, on the point of dying.

Since I have not really given any thought to this particular translation agency for the last 25 years until I wrote this post yesterday, to me this is clear evidence of what Karl Jung describes in his theory of synchronicity.

Or it could be the result of what John Lennon calls “Instant Karma”:

“Instant Karma’s gonna get you
Gonna knock you right in the face” ….

It took 25 years for this particular instance of Instant Karma to manifest itself, but then again, 25 years is less than an instant in the grand, cosmic scheme of things.

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Responses

  1. I recently had a similar experience. A one-man, but long-established translator/agency owner, sent me a lot of work for almost a decade. He liked the quick turnarounds, my expertise and experience in the commercial/legal field, and other aspects that allowed him to build a reputation for quality commercial/legal Dutch>English translations with short delivery time lines. His payment practices were a little erratic, averaging 60 days, but I weighed this against the volume and his willingness to pay to pay my very reasonable fees.

    When the financial tsunami originating in the Wall Street Casino hit Europe, things went pear-shaped pretty fast and he admitted that things were getting difficult.
    I started noticing that once accounts became seriously overdue, work dried up. Fairly typical of such situations; use someone else until you can pay, and then switch back and let the other guy carry the can for a while (I have owned a collection agency in the distant past).

    When things started to go from bad to worse early this year, he told me that he was setting up additional (small) and unrelated businesses to diversify his income stream and hoped to be able to pay me ‘soon’.
    When I gently pointed out that he was using my money to set up other businesses, the response became rather barbed, focusing on his ‘loyalty to me’ over the years and how ‘he had advanced payment to me and his other translators over the years before he got paid himself’. I made one attempt to point out that he was not acting as my agent and that my contract was with him rather than his client….. It was a waste of time.

    My willingness to be flexible, evaporated at this point.

    The commercial realities are relatively simple: the capital required for a business enterprise consists of 3 main components:

    (1) the money that the owner invests (on which he must earn a return to cover inflation, opportunity cost and risk (I would think at least 15% in the current settings);

    (2) borrowings like overdrafts, secured loans, etc., on which he has to pay the bank interest (say around 12 – 15% including fees and penalties)

    (3) working capital made up of the positive difference between assets and liabilities (in simple terms, primarily the difference in the money you are owed by clients, and the money you owe your translators in this case).

    The latter is free money, of course. The sooner you can get your clients to pay, and the longer you delay payment to your translators, the more working capital you have and the less you need of the two former modes of (costly) financing.

    The reverse is also true, of course, and this poses a considerable risk for us. Many fly-by-night, and even well-established agencies, with little or no capital or borrowings of their own, will try to make ends meet by carefully manipulating this equation. They fall over rather rapidly when things get tough and their own clients delay payment, leaving the translator in the lurch.

    If my observations are anything to go by in this business of rapid global interchange of services and payments, the translators know little or nothing about the agency or its owner that would help in retrieving their money when it hits the fan.

    It seems that in this regard too, the translator is the proverbial ‘hindmost’ in this predominantly Anglo-American model of a largely free-for-all market driven economy where it is ‘every man for himself and the devil……….’ 🙂

    DoubleDutch Translations

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  2. “It seems that in this regard too, the translator is the proverbial ‘hindmost’ in this predominantly Anglo-American model of a largely free-for-all market driven economy where it is ‘every man for himself and the devil……….’”

    Absolutely.

    But I think that what you are describing is the modern corporate model, even if we are talking about a single operator.

    However, we don’t have to follow the corporate model, or the Anglo-American corporate model, which at this point looks more like the Italian model invented by Mussolini in 1938, called corporativismo – where corporations are all-important, governments less so and largely subservient to corporations, and individuals are completely inconsequential. This is in fact modern American capitalism, you have to be blind not to see it.

    For example the guy who always pays me by return mail is not following the corporate model. And I think that what he is doing is very smart because he’s got himself a stable of translators who always find the time for him, no matter what ….. because everybody always needs money ASAP these days.

    I try to do the same in a small way as I don’t use a lot of translators, just a few, but some of them quite frequently.

    I usually pay translators who work for me quickly. If it is a relatively small job, I pay within a week, although if it is a major amount, I sometime have to let them wait 30 days.

    But never more than that.

    I think of it as my small contribution towards destruction of the modern Anglo-American economic model called il corporativismo.

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    • This exactly where we should be headed, in the opposite direction of the large corporate LSPs, i.e. towards professional practices. But we do need to differentiate ourselves, otherwise a potential client will not be able to choose.

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  3. Hi Steve! Great post, as usual 🙂
    I also prefer working with smaller (and younger) agencies. For some reason, they tend to pay faster and they don’t try to talk me into lowering my rates. One Russian agency I am working with pays every two weeks (btw, this is a standard practice for good agencies here. I only wish there were more of them) and there’s another Swiss agency I work with that officially pays within 21 days, but in reality I always get paid within 10-14 days after I send my invoice. You are right saying that everybody needs money ASAP these days, so I guess it’s only natural that I always try to make sure I have the time to do work for those agencies who pay faster.

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    • Hi Olga:

      Thank you for your comment.

      Unfortunately, even many small agencies may turn out to be pretty sleazy, but it is a good rule of thumb that the smaller ones are usually better.

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  4. […] What payment terms are translators putting on their invoices these days? As far as I know, here in United States, "30 days net" has been the most commonly used payment term for several decades in t…  […]

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  5. I’ve always put 14 days on my invoices. All of my direct clients (mainly law firms in Germany and Switzerland) pay well within that period. I work for one agency in Switzerland which pays really quickly but another which pays 30 days from the end of the month so great fun if you complete the work on the 1st of any given month!
    As you say, there’s definitely no norm.

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  6. Hi Karen:

    You are lucky if you can get paid from most of your clients so fast.

    Maybe I should start putting 14 days on my invoices to new direct customers from now on?????

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  7. On the occasions that I ask a colleague to do a certified translation for me, I pay when I receive their invoice. In addition to the benefit you alluded to, i.e. creating goodwill, it also saves administrative time/costs by not having to deal with ‘accounts payable’, and costs are reflected in the same time frame as the income they relate to. Much simpler all around 🙂

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  8. This is easy to do when something like this happens only occasionally and relatively small amounts are involved.

    But it is hard to do when you owe several translators several thousand dollars, which is sometime my case.

    But even the occasional small amount will great a great deal of good will, plus you don’t have to worry about accounting procedures as you said.

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  9. The owner was hateful, but look at it this way: he helped kick you towards independence, and you’re doing better now because of it.
    Cheers from the continuing deluge

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  10. Exactly.

    Cheers from another Bohemian who is at the same time a Virginian.

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