| Pages in topic: [1 2] > | Delayed payment - why not pay at once? Thread poster: Heinrich Pesch
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Heinrich Pesch 
Finland
Local time: 11:51
Member (2003)
Finnish to German
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I have always wondered why business partners in some countries think it normal to pay after two or three months. As I see it, keeping the money on the bank account instead of paying swiftly helps nobody. Even if the end client pays late, every business should have the muscle to pay its own dept without delay.
| | | | Samuel Murray
Netherlands
Local time: 10:51
Member (2006)
English to Afrikaans
+ ...
Heinrich Pesch wrote:
I have always wondered why business partners in some countries think it normal to pay after two or three months.
1. Maybe that's just how their accounting is set up.
2. In addition, although I know we always say that our contract is with the agency and not with the end-client, we know that the agency is just an intermediary. An agency in the business of buying and selling widgets can still sell the widget to another party if the original party decides not to pay for it, but a translation agency isn't going to be able to sell your translation to someone else other than the original end-client who ordered it. Your translation has no resell value for the agency. So the argument that whether or not the end-client pays is irrelevant to us, isn't 100% applicable. It makes sense, from the agency's perspective, to wait until the end-client pays before paying the translator.
You may say that by delaying your payment, the agency is forcing you to provide them with credit, but from their perspective they would be the ones providing you with credit, if they were to give you your money before they have received theirs.
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One of my regular agency clients told me that they don't give me the go ahead until they have the payment ahead of time from their end client themselves. Besides, someone acting as a middleman should have finances arranged in such a way as to be able to pay for products they have ordered.
| | | | Christophe Delaunay (X)
France
Local time: 10:51
Spanish to French
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Samuel Murray wrote:
You may say that by delaying your payment, the agency is forcing you to provide them with credit, but from their perspective they would be the ones providing you with credit, if they were to give you your money before they have received theirs.
Do you believe that a dentist who needs a whole range of very expensive materials (sometimes ordered for a specific
client) doesn't pay for them until his clients have actually paid him?
I think it should be an obligation for a business to have the necessary funds in order to be able to pay their creditors as soon as possible.
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Christophe Delaunay wrote:
I think it should be an obligation for a business to have the necessary funds in order to be able to pay their creditors as soon as possible.
That would be nice, wouldn't it? But in that case, I think most of those agencies operating as "Ltd." would have to close down overnight (and perhaps that wouldn't be such a bad thing).
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I couldn't agree more! It never ceases to amaze me how businesses think it perfectly acceptable to pay 60 days after the end month in which they receive my invoice. As translators, we are often at the end of the chain. We are small fry in the minds of many and yet we are the ones who are expected to wait until those at the top of the chain pay and thereby set up the domino line of payment to all below? No, I don't agree with that either.
I get sick of how regularly it seems necessar... See more I couldn't agree more! It never ceases to amaze me how businesses think it perfectly acceptable to pay 60 days after the end month in which they receive my invoice. As translators, we are often at the end of the chain. We are small fry in the minds of many and yet we are the ones who are expected to wait until those at the top of the chain pay and thereby set up the domino line of payment to all below? No, I don't agree with that either.
I get sick of how regularly it seems necessary to explain basic contract law to my client. They know the rules and play it dumb. I still explain to make it clear that I know. My contract is with my client, any delay further up the line is his problem, not mine. If you can't pay your supplier according to the terms agreed, then you find another supplier.
We translators are not stupid either. We are able to understand that a client will prefer to have money in from a job before paying out on the job. But can we seriously be expected to accept that? I say no. I now only work for clients who are able to pay me according to the terms agreed upon. I also spring into action when the agreement is not respected.
Nevertheless, as business people, particularly the ones at the end of the line, we should not underestimate the amount of funds we need available to meet our requirements (=being able to pay our own business expenses and make a living from our activity) without exposing ourselves to interest and penalties to cover them when clients pay late.
[Edited at 2018-09-06 10:18 GMT] ▲ Collapse
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Samuel Murray wrote:
2. In addition, although I know we always say that our contract is with the agency and not with the end-client, we know that the agency is just an intermediary. An agency in the business of buying and selling widgets can still sell the widget to another party if the original party decides not to pay for it, but a translation agency isn't going to be able to sell your translation to someone else other than the original end-client who ordered it. Your translation has no resell value for the agency. So the argument that whether or not the end-client pays is irrelevant to us, isn't 100% applicable. It makes sense, from the agency's perspective, to wait until the end-client pays before paying the translator.
You may say that by delaying your payment, the agency is forcing you to provide them with credit, but from their perspective they would be the ones providing you with credit, if they were to give you your money before they have received theirs.
That is an entirely unsustainable business model. Paying suppliers out of expected revenue is just asking for trouble.
Only a mug would work for an agency that operates on that basis. Sooner or later they will collapse and you will carry the can.
| | | | | The evolution of translation agencies after globalization | Sep 6, 2018 |
Before the Internet became high speed and widespread, translation agencies were established service providing companies that would analyze a client's request, decide on the adequate people from internal staff or external vendors (professional translators) to fulfill it, and take care of the logistics of sending and receiving papers, or later, floppy disks. They had working capital, so that they could regularly pay their staff, office rent and other expenses, as well as the external translators t... See more Before the Internet became high speed and widespread, translation agencies were established service providing companies that would analyze a client's request, decide on the adequate people from internal staff or external vendors (professional translators) to fulfill it, and take care of the logistics of sending and receiving papers, or later, floppy disks. They had working capital, so that they could regularly pay their staff, office rent and other expenses, as well as the external translators they hired. They had accounts payable, accounts receivable, and a budget which included marketing, to make ends meet, and ensure some healthy profit for growth. Most - if not all - clients and vendors were geographically local.
The Internet made possible a new business model, based on the ubiquity of translation work. As I put it, if I suddenly moved from Sao Paulo to either Tashkent, Reykjavik, or anywhere else, provided I had an adequate Internet connection, I could continue my business exactly as before. If I had no concern for working hours, I wouldn't have to tell my clients that I moved.
So what does a contemporary 21st Century translation agency look like?
Anyone can set up a translation agency with NO capital. All they need is a laptop on the kitchen table and a pretty stable Internet connection. If they can set up a web site and a domain, they'll get clients from all over the world. Likewise, they'll get people (professionals, amateurs, wannabes, and willneverbes) who can supposedly translate for them, so they can deliver, and get paid.
If their business grows, they can have PMs scattered worldwide, all working in a similar home office setup. Some of them won't even be working at home, but have their office in a café or bookstore where there is free WiFi.
Since they have no capital, how do they handle cash flow? It's simple! They must get paid before they pay. So they merrily squander the money they get until it's time to pay the translator. If needed, they can use the money from the next job.
They don't worry much about due diligence, checking each of their clients' ability to pay. After all, something between half and most of the money they'll get is the translator's. Why bother? Their leonine vendor agreement conditions the translator getting paid if - and only if - the end-client pays.
Meanwhile most of the translators, numerically, tend to be bilingual people who think they can wing it. They do it as a side business, moonlighting, while they are looking for a new daytime job, etc. They aren't so concerned about how much or when they'll get paid. That money is intended to be a bonus; they just want to make some extra cash with the resources they have available (time, being bilingual).
One key problem of globalization stems from typically local differences that are impossible to iron out.
One of them is the cost of living. Of course, this will make a translator in Delhi much, much cheaper for the same amount of work than one in Los Angeles. However while it should be relatively easy to find a translator in any Western language pair in L.A., there may be none for some pairs in India.
Another one is interest rates, that depend on each country's economy. The difference here may be several times the variation in the cost itself. While in the dollar-euro-pound countries the monthly interest rate is a fraction of 1%, in Brazil it's low 2-digit in %, and in Argentina it has recently skyrocketed to mid-two-gigit %. If translators in high-interest countries are money-savvy, they should be charging hefty rates for delayed payment.
All this setup makes it easy to identify a translation agency type...
A blatantly undercapitalized post-globalization translation agency will state "we pay in 60 days after month end, and this term is non-negotiable, ever". Even if a translator in a high-interest rate country offers them a big discount for COD payment, something it would take years to accrue in their country, they don't want it. Either they don't have credit (little or no capital), or they know they haven't done due diligence, so if the end-client doesn't pay, they'll have to default, but it would be quite profitable to pay COD with a loan secured locally.
The old-school, financially solid agencies, will pay much sooner if they have any advantage in doing so. If a job is huge, they'll quickly agree to advance or interim payments to translators they know and trust. They always do due diligence on the client's credit status. If a translator asks them to be paid before the agreed date for any - or no - reason, they'll comply immediately. As one agency accountant explained, "We cluster all translator payments in one specific day for our convenience, to get it done at once. I spend that day paying an army of a couple hundred translators and interpreters everywhere via different payment methods. If one or another translator needs it earlier, just ask, and we'll do it immediately."
So it's just a matter of financial clout, aka the translation agency's liquidity. If they have no capital, they can't pay before they receive. After all, they are empowered to decide on the end-client's credit rating and payment term.
The worst kind of agency a translator can work for - and this is easy to ascertain from their web site - is the one demanding up-front payment from the end-client, and paying its translators in 45, 60 or more days... with the up-front money from the NEXT job. If demand declines, they'll default. ▲ Collapse
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Back in the 1990s, agencies in France were operating on the 60-day end-of-the-month payment system for their translators. Many still work that way. The explanation back then was they needed the money in from their client in order to pay me and of course, if their client delayed, it was the explanation for not paying me on time.
Whether this "explanation" was true or not, I was wrong to accept it as a means of running my business. Indeed, I now consider the "explanation" as h... See more Back in the 1990s, agencies in France were operating on the 60-day end-of-the-month payment system for their translators. Many still work that way. The explanation back then was they needed the money in from their client in order to pay me and of course, if their client delayed, it was the explanation for not paying me on time.
Whether this "explanation" was true or not, I was wrong to accept it as a means of running my business. Indeed, I now consider the "explanation" as having been and as being an excuse. It obviously makes better business sense to the intermediary. From our end-of-the-line position, it makes no sense. For the UE, the default term is 30 days, 60 days in special circumstances when agreed and 45 days for a periodic invoice (e.g. a monthly invoice for work for several jobs). There are variations to these basic rules but the 60-day thing is meant to be an exception for people like us. The reality is that it is not an exception at all. The difference for me now is that I no longer accept those terms. Agencies that pay within 30 days do exist.
For information, with direct clients, the payment process is set in motion when I send my work and the invoice. I generally receive my money within a few days to a couple of weeks of sending the invoice. From bigger companies, the internal procedures may take up to a month. With private individuals, payment is within days.
[Edited at 2018-09-06 13:12 GMT] ▲ Collapse
| | | | DZiW (X)
Ukraine
English to Russian
+ ...
| Because they can! | Sep 6, 2018 |
Profiteering, dropshipping, outsourcing, pandering, translation...
Frankly, I've never seen an agency I would like to work with or dare to recommend it. While most middlemen also try to maximize their gains minimizing costs and efforts, they don't really like talks about real added value for they rarely provide any useful services: no escrow, no warranties, no proofreader/editor, no styleguides, no TMs/glossaries, no field exp... See more Profiteering, dropshipping, outsourcing, pandering, translation...
Frankly, I've never seen an agency I would like to work with or dare to recommend it. While most middlemen also try to maximize their gains minimizing costs and efforts, they don't really like talks about real added value for they rarely provide any useful services: no escrow, no warranties, no proofreader/editor, no styleguides, no TMs/glossaries, no field expert to consult, no legal or financial assistance, no any support. A modern agency is but a (self-modifying) prospects catalogue with no liabilities: a kind of translation dropshipping, pandering, or even pimping.
Why, I rarely meet translators clever enough to draft their own terms; quite a pair, right?
However, I did encounter several agencies, which paid once the project was revised and approved--within a few days after delivery. Also a couple of friends mentioned their agencies boasted to pay at least 50% in case of cancellation or force majeure. ▲ Collapse
| | | | | Agencies must have the liquidity to pay on time | Sep 7, 2018 |
In practice, the agency's clients pay into one big bank account, and translators are paid from a single account. You are not paid with the same bank notes that the end client paid in to the agency. It is all done electronically. Any agency that cannot pay its translators on time from its current liquid funds should be filing for bankruptcy.
What are translators supposed to live on and pay bills with while translating and waiting to get paid? In precisely the same way, agencies must ... See more In practice, the agency's clients pay into one big bank account, and translators are paid from a single account. You are not paid with the same bank notes that the end client paid in to the agency. It is all done electronically. Any agency that cannot pay its translators on time from its current liquid funds should be filing for bankruptcy.
What are translators supposed to live on and pay bills with while translating and waiting to get paid? In precisely the same way, agencies must have earnings in hand from previous work while waiting for their clients to pay them! ▲ Collapse
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Christine Andersen wrote:
Any agency that cannot pay its translators on time from its current liquid funds should be filing for bankruptcy.
Is this were a law strictly enforced worldwide, more than four out of every five translation agencies existing today would be shut down.
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[Edited at 2018-09-07 13:52 GMT]
| | | | | We are businesses | Sep 7, 2018 |
In the business world, payments have a deadline. It is absolutely normal that a company does not pay incoming invoices on the same day. Verifying, handling, and paying thousands of invoices every month takes time. And of course the company needs to manage its liquidity. It is perfectly normal that businesses do not only rely on their own capital, they use borrowed capital as well. Companies that have to wait for the payments of clients and at the same time have to pay their own suppliers ... See more In the business world, payments have a deadline. It is absolutely normal that a company does not pay incoming invoices on the same day. Verifying, handling, and paying thousands of invoices every month takes time. And of course the company needs to manage its liquidity. It is perfectly normal that businesses do not only rely on their own capital, they use borrowed capital as well. Companies that have to wait for the payments of clients and at the same time have to pay their own suppliers need external capital and have to manage their liquidity very carefully.
And borrowed capital costs money - interest. The time span between outgoing payments to suppliers and incoming payments from clients does affect the profits of a company directly.
We as their suppliers can complain about morals and ethics of late payments, but asking why they do it is absurd. They do it because it affects their bottom line.
And payment terms below 30 days are perfectly okay and acceptable, for that matter. ▲ Collapse
| | | | Heinrich Pesch
Finland
Local time: 11:51
Member (2003)
Finnish to German
+ ...
TOPIC STARTER | Not convinced | Sep 7, 2018 |
Kay-Viktor Stegemann wrote:
And borrowed capital costs money - interest. The time span between outgoing payments to suppliers and incoming payments from clients does affect the profits of a company directly.
We as their suppliers can complain about morals and ethics of late payments, but asking why they do it is absurd. They do it because it affects their bottom line.
And payment terms below 30 days are perfectly okay and acceptable, for that matter.
In the EU we have the same interest rates, but those 60+ days payers are from France, Italy, Spain, whereas German, Austrian and Dutch companies pay within 30 days, even within a week after invoice.
By the way, if an Italian office orders from me a translation from Finnish into German, the end client probably is from German speaking countries, where they will pay their suppliers in a month's time. But the Italian company will keep the money on their account for another 30-45 days before paying me.
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