Posted by: patenttranslator | May 16, 2017

What Are Your Payment Terms and How Long Do Clients Really Take to Pay?

This is probably the second most popular subject discussed by translators on the internet, right after “What actually is the going rate?”

And for good reason because the consequences of cash flow problems can be deadly, even for a busy translator who has enough work at good rates.

But just as there is no such thing as a “going rate”, there is no perfect recipe for marvelous universally applicable payment terms, because everything depends on your personal situation, which involves a number of variables. I will try to give a few elucidating, practical examples of what these variables are.

The Situation Thirty Years Ago

Although I did not know anything about anything when I started my illustrious career in freelance translation thirty years ago, I did know that most translators set thirty days net as a payment term on their invoices. So that was what I was going to put on my invoices too. In those days, I was working only for translation agencies and most of them paid in more or less thirty days, give or take a week or two.

Because I had many bills to pay, it made me very nervous when an agency that owed me quite a bit of money took longer than that, which did happen once in a long while, even back then.

When agencies owe you a lot of money and keep sending you new translations, it creates a dangerous situation because you don’t know what’s happening at the agency. Should you accept new work and keep your mouth shut? What if they are about to go bankrupt? If this is the case, your ship will go down with theirs. A translation agency is much more likely to go bankrupt than for example a law firm, but this can of course happen in either case.

I remember that in one situation, I was working for a small agency that had a lot of work for me for many months – a constant stream of Japanese patents to translate into English. From what I later found out about them, they had so much work because they had a contract for translating Japanese patents for the US government.

Although they usually paid in about five to six weeks, at one point they owed me about five thousand dollars for more than two months. Five thousand dollars was a lot more money thirty years ago than it is now, especially in San Francisco. The studio I was renting on lower Nob Hill, with incredible views of the financial district, downtown and Mount Sutro, especially at night, cost 500 dollars, and a three bedroom apartment in the Richmond District, two short blocks from the Golden Gate Park and two short blocks from the Asian restaurants and Green Apple Bookstore on Clement Street, was renting for 750 dollars a month. They must cost four times as much now.

So I called this agency’s number, with my heart beating in my chest as fast and hard as when I ran up Hyde Street from Fisherman’s Wharf to California Street. I used to chase cable cars like this every Saturday morning when I lived in San Francisco thirty years ago. From Joyce Street it took me an hour to get to the Golden Gate Bridge, and an hour to get back.

Lydia, the person who called me before she would send another FedEx package with a bunch of Japanese patents, (that’s how things were done in the pre-internet era), answered the phone when I called. I liked working with Lydia – she was pleasant and obviously knew what she was doing, not like the clueless kids who work for translation agencies nowadays.

But the question of when I was going to get paid was above her pay grade and she passed the phone to her boss, the owner of the small agency.

And the owner, who died a few years ago, was anything but nice to me. I remember in response to my timid question of why I hadn’t received my check, he said, “What are you talking about. We sent you the check already. What are you insinuating?

Well, I was “insinuating” that I did not receive the check and that I needed it to pay my bills. He did not seem to believe me. Or so he said. He called his bank, and then called me to concede that to his surprise, the bank had confirmed my perfidious insinuation. (He did not use this adjective, but he as well might have).

Because not receiving the payment was obviously my fault, he made me pay a check cancellation fee and a FedEx fee for issuing a new check to be sent to me as a condition of sending me a new check.

I held my tongue and stoically accepted the unfair, absurd and demeaning conditions.

Two days later I received a FedEx package with the payment for my work from the agency owner  generalissimo for the last two months of work, minus about 45 dollars.

The day after that, I received the original check by regular mail with a date stamp on it that was more than two weeks old. I was so angry at the agency that I just ripped up the check without letting them know anything.

A few days later, sweet Lydia called me to let me know that she was about to send me another batch of Japanese patents, as if nothing happened. When I told her that I would never work for her again because I did not like how her boss treated me, she was surprised.

But she understood, she said.

I am of course only guessing, but I think I know exactly what happened. The agency owner, whose main source of income was the US government, was waiting for Uncle Sam to pay him and the government was taking it’s sweet time as it often does.

So he printed my pay check envelope on his office postage machine with a date that would be only a few days later than usual, but then he was sitting on the envelope for a few more weeks until he finally got paid himself, which was when he actually mailed it with the check in it.

But he could not have told me that of course! His big ego was demanding that the translator who dared ask for his money be treated like a stupid dog who pissed on the carpet in his immaculate house.

The Situation Now

Why am I boring you, gentle reader, with this ancient history? Well, for one thing, it felt good to get it off my chest, even after all this time. But I also think this sordid story shows that things have not changed that much in the last thirty years when it comes to how we translators are treated if we insist on our payment terms. And if things have changed, they’ve only changed for the worse.

It is becoming more and more difficult to make clients respect a reasonable payment period of thirty 30 days net – much more difficult than three decades ago.

Although I always put “thirty days net on my invoices ” as the payment term, I would say that perhaps a third of my most important clients, by which I mean patent law firms, pay me in about four to five weeks with the rest of them taking six to eight weeks to deliver the payment.

Once, about two or three years ago, I dared ask a patent lawyer (after just four weeks) in an email when could I look forward to receiving a check. He got so mad at me! How did I ever dare ask such an insolent question!

I used to send inquiries about late payment quite frequently to speed up the cash flow process for many years, and the usual response from patent lawyers or paralegals would be, “I will check with (or forward your inquiry to) the accounting department.” So though an inquiry presumably would sometime cause the check to arrive a little earlier, other times it would have no effect.

But the sudden, naked rudeness in the response of this particular customer made me understand that his law firm was waiting for payment from its clients much longer than 30 days, which was most likely why he felt the need to vent his frustration on a convenient target, in this case a lowly insolent translator.

The crux of the cash flow problem that most of us are only too familiar with is that as important clients, especially large corporations, kept stretching payment terms for providers over the years and decades to extract more profit from the “float”, most of our customers, both direct ones and translation agencies, simply put the burden of having to wait twice as long as before (or longer) to get paid on us.

Problem solved.

Fortunately, not all of my clients believe in solving their problems by making them our problem.

Some customers, both direct clients and agencies, pay quickly because they want to make sure we will always find time for their projects and because they understand the old saying that, “who pays fast pays twice” has never been more true than now.

Although my official payment policy is still thirty days net, instead of adopting an iron-clad rule not to work for customers who take significantly longer than this, I try to be flexible, depending on who the client is.

If the customer (for lack of a better word) is a translation agency, in the future I no longer accept another translation from them if they take too long to pay. I am not seeking a confrontation, I just tell them I am busy, and eventually they go away.

Since translation agencies are making profit directly from my work, I believe they should set aside their own independent capital to pay me on time. This solves part of my problem, but only if I have enough work from other sources. Fortunately for me, I need to make much less money now that our children live on their own, so quiet periods are not as scary for me as they used to be, especially since I do enjoy being lazy once in a while.

Although most of my income is generated from my own translations, I am an agency too. But because I don’t believe that I have the right to make my cash flow problem the problem of people who work for me, I always pay translators who work for me within thirty days, often well before I myself get paid.

Paypal makes this very easy for me. If I don’t have money in the bank, which happens, I just put the payment on a credit card. It means that I have to pay a little bit more, but not much more, because I am always able to pay the credit card bill in full when it arrives in about three weeks.

But it also needs to be said that some translation agencies are very considerate when it comes to payment terms. Three agencies that I work for generally mail me a check when they receive my invoice, and one agency pays me with a bank transfer on the first and sixteenth of each month (during the months when they have work for me).

I think the solution in the jungle of a system of rules used in corporate financing, which is based on the general principle of squeezing the little guy as much as possible, is to have a flexible policy that distinguishes between valuable and less valuable clients. I do insist on being paid on time, but generally only with clients that I perceive as not terribly valuable.

Valuable clients get away with more than less valuable ones, although I also try not to get into a situation where an important client would owe me so much money that his firm’s bankruptcy could drag me down with him. But one also needs to have in the mix clients who pay quickly, if there are also other clients who take a long time to pay, to make ends meet.

And I also think that clients who bring little value to me (agencies paying low rates, for example), are best eliminated.

Like I said, I can manage with fewer clients since I need much less money now than I used to.

I do enjoy reading my books, binge-watching Netflix series, and following the pretty incredible stories about the latest scandal du jour happening just about every day in the White House on American teevee quite a bit.

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Responses

  1. Today I was approached by an agency in Romania that wanted to offer me nearly half my going rate in this case for a highly technical translation involving deep-sea diving (a subject I know something about). They refused to even pay my normal rate for non-techical translation and had the nerve to claim that they might “revise their rate for future translations”. Do they think I was born yesterday? There was the usual rubbish about “our client is only offering us this rate”, blah, blah, blah. Speaking of rates, there was a fascinating interview on the BBC World Service yesterday with two professional interpreters, one in the UK. The British one admitted she is only paid £20.00 per session! She is a medical interpreter which requires a knowledge of medical terminology in both languages of course. Can there be ANY profession that is so despised and underpaid as interpreting? It is virtual slavery.

    Liked by 1 person

  2. “Some customers, both direct clients and agencies, pay quickly because they want to make sure we will always find time for their projects and because they understand the old saying that, “who pays fast pays twice” has never been more true than now.”

    So true. My best clients do actually pay within the 30 days, although I think that one small agency only does one payment run a month (possibly only using an accountant part-time, as we used to do), so if I miss that I have to wait a bit longer to be paid. One relatively new client who has been sending me quite a lot of work is lagging a bit behind, and I’m currently putting that down to initial teething difficulties, although if it continues I will contact them about it.

    Cash flow can be a problem,as you say. As a sole trader, I don’t need to have a business account, so operate from a personal account. I’ve also got a couple of linked savings accounts offering better-than-usual interest rates provided that I have a specified minimum amount coming into the personal account per month. If that amount doesn’t arrive one month, I think they are entitled to drop my rates to the standard ones, which could mean a drop of 3%, which would be painful, so it is pretty essential that my cash flow keeps flowing.

    Liked by 1 person

  3. A Japanese>English patent translator wrote a few years ago that he has not been able to charge more than 20 yen per word to new clients since 2000. Another J>E patent translator has been charging 15 yen and 18 yen per word to two legal agencies, the only two firms he has worked for since 2000.

    It will be interesting to see what happens when other J>E translators who are not immune to falling rates try to get higher paying clients.

    The yearly income of a veteran J>E patent translator has been converging to that of an experienced American English high school teacher. That wasn’t the case in 1990 or even in 2005.

    Like

  4. Yes, this is true in my case as well.

    Ten years ago, I was translating mostly Japanese patents. These days, I see a Japanese patent only occasionally.

    So I switched to German patents, mostly for filing.

    There is as much work in this language combination now as there used to be in Japanese, and I can charge the same rate for German as I did for Japanese.

    So I’m OK.

    Nothing last forever, not even the superiority of Japanese technology. I don’t know what happened, but I know that if I walk into a Best Buy store now, I am surrounded by Korean and Chinese TVs. Ten years ago, most of them were Japanese.

    Like

  5. I want to say big thanks to Mr. Steve Vitek. I recently needed a translation of my high school diploma from Czech to English language. I quickly realized it’s harder than I thought to find a certified Czech translator. I sent email to 8 translators I found on atanet.org and Mr. Vitek was the only one who responded to my email. He was able to translate my document in 1-2 days. He communicated with me through the whole process and his response time to each of my emails was no longer than 10 mins – talk about excellent customer service. I’m very satisfied with his service. I’m positive I will need more documents translated in the future and I can confidently say I will be a returning customer. Thank you for your time, thank you for your fair prices and most importantly thank you for being on top of things while providing the best customer service I’ve ever received.

    Liked by 1 person


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