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Operating as a business August 12, 2010

Posted by Jill (@bonnjill) in Business practices, Random musings.
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I don’t even know where to start with this, so I’ll just come out with it. I just found out today that one of my colleagues is owed €20,000 by a client (a client with whom I used to work and gave the boot to several years ago). To make things worse, some of those jobs had been given to another translator to translate and he has paid her for her work. So essentially he has LOST money on this customer! How on Earth did this person let it come to this? I was completely speechless when I heard about it (which, believe me, almost never happens).

I don’t know about you all, but I would have cut this “agency” off after being owed €1,000. Never in a million years would I have allowed the bills to pile up to €20,000. That’s just insane. I also would have been reporting my experience on Payment Practices after the first majorly overdue invoice (my rule of thumb is 30 days overdue is too long), so other translators won’t fall into the same trap. People, people, we aren’t translating for the fun of it – or at least we shouldn’t be. I don’t know about you, but I have rent to pay, groceries to buy, a dog to feed, and bills that need to be paid. I am not in the business of working for free. I am absolutely aghast at some of my colleagues’ business practices.

If you learn nothing from this blog but this I will have achieved my goal – to be successful you need to act like a professional! That means treating your clients with respect, responding promptly to e-mails and phone calls, billing within a reasonable time frame and following up on overdue invoices. If a client lets the overdue invoices pile up you need to stop working for them. Whether you decide to continue working with them after they have caught up on the invoices is entirely up to you, but please don’t ever let the overdue invoices total half, a third or even a fourth of your annual revenue. Read Corinne’s book on How to Succeed as a Freelance Translator. Read Judy’s book called The Entrepreneurial Linguist. For goodness’ sake act like a businessperson!

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Comments»

1. Kimmo Linkama - August 13, 2010

It really seems your colleague has stretched his good will and belief in the goodness of people a little too far.

The definition of ‘overdue’ is, of course, somewhat dependent on the payment practices in the translator’s market. For example, in northern Europe the most usual payment terms are 14 days net, which raises a red flag with me after 21 days. Holiday periods excluded, of course—if the person approving your invoice happens to be on holiday, you just have to sit it out. (In the Nordic countries, people generally have 4 weeks of summer holidays and entire countries are practically closed for that time.)

Out of curiosity, I took a look at my stats for last year and this year so far. Administrative glitches excepted (bills internally routed to wrong cost centres etc—to err is human, even in big companies), the maximum delay was 21 days. Totally unacceptable, but this was a good client, the relationship with whom I didn’t want to burden by collecting…

What I usually do is allow the client to be 3 banking days late because international bank transfers take that long. After that, I flag the invoice. Seven days late, and I send a polite reminder, assuming the invoice has somehow got stuck in the process without fault from the client’s part. A more strongly worded reminder goes out at fourteen days, and if I haven’t received payment or heard a good explanation by 21 days, I have to hint at collection.

As you say, we’re in BUSINESS, even if we are individuals. Cash flow is important for our clients, and it should be for us, too.

Jill (@bonnjill) - August 13, 2010

When I said 30 days overdue is too long I meant that is the cut off point when I report the client to Payment Practices.

I use a similar system as you, Kimmo. I check the PO to make sure the payment is due net 30 and not net 45 first. If it’s net 30 I wait about a week before I send a polite reminder. Usually that’s all that’s needed, but stronger reminders get sent out at 14 days as well.

2. Kevin Lossner - August 13, 2010

Cash flow and risk management is important; my record in this regard is variable, as I tend to ignore these when I’m under stress with a heavy workload. So I was rather pleased to discover last night (!!!) that the tool I use for managing my projects and billing wouldn’t let me start a new project because the customer was allegedly two weeks overdue with a payment. (She wasn’t actually – I was late in adding some promised details to an invoice and re-issuing it, but I still appreciated the reminder.) Other risk-related factors like credit limits, business type (or status as a private individual) can also be taken into account in defaults for credit limits, prepayment requirements, etc.

I believe a number of business management tools for translators or LSPs can do this, and it’s wise to take advantage of such capabilities to avoid messes like you mentioned here.

Jill (@bonnjill) - August 13, 2010

Hi Kevin, what tool are you using? Translation Office 3000? Another one? I enter my invoices into MS Money, so it tells me when the invoices are due and how many days they are overdue. Once they are paid I note how many days early or late the client paid in the Note field.

Kevin Lossner - August 17, 2010

No, Jill. Although I like TO3000 for many things, in the end it proved inadequate for some rather critical needs that it and most other products are unable to meet. For a variety of reasons I’ll explain another day (in many ways redundantly) on my blog, I needed (potentially multi-user) online access, reliable automated backups and secure, server-based client deliveries, and I didn’t have the time, money or inclination to mess with my own in-house server, so I went with the SaaS Online Translation Manager from LSP.net. It may be a bit of overkill since it’s agency-class software, but the unreliability of e-mail screwed me so often that online archiving and delivery was the most important factor in the end for me.

I’m currently using the OTM configuration of a partner, not the one I set up for myself originally, and he has a zillion risk management rules built into his set-up that I had not configured before. It drives me nuts at times, but it also provides a nice safety net by warning me about outstanding issues if I haven’t gone looking for them myself.

3. Tess Whitty - August 13, 2010

Thank you for the tool tips guys. I had a client that was overdue for several months, despite reminders. I stopped working for them right away but also did not receive any more jobs. I called several times, no answer. I used a collection service, no result. Turns out that the company went bankrupt. Luckily the amount was not very much. I just wanted to emphasize on Jills post. Do not slack on reminders. Get the money while you still can. Have a great weekend!

4. Barbara Dylla - August 16, 2010

I agree with Tess: do not slack on the reminders! I am still running after payment on an invoice issued April 22! It’s not a huge amount (under CA$400), but I hate overdue payments. I gave a final warning last Friday, both verbally (voice-mail) and in writing. If no cheque appears by Friday, I will take it to the next step (Small Claims Court).

The client is not mine, it was overflow work from a friend who let me know the company is not punctual with payment. But four months is a bit much!

I have such problems about once a year. I also cut them off after I receive the final payment. Thanks, Jill, for writing about such an important issue.

5. Judy Jenner - August 20, 2010

Couldn’t have said it better myself, Jill. We try to address the issues very early on (waiting doesn’t do anyone any good) and might have gone overkill the other direction: a client was very late for a payment (by our standards, which was about 45 days). They did eventually paid, and when they contacted us for a new project (this was a different person, same company, a direct client), we carefully pointed out that we’d had difficulty collecting and thus needed a payment up front. Never heard back from them, so either we 1) offended the new person who is completely innocent and has nothing to do with her colleague in this large company whom she has never met and is mad that we are questioning her personal ability to pay invoices or 2) they wanted to see if they could float some payments for a while with us again. This was a rather large client, so we hope it’s not option #1, but in either case, we need to protect our business interests, and chasing after payments is not our core competency. Thanks for the book shout-out!

@Barbara: small claims court is a great idea if it’s in the same state. Just spent 40 hours in court for court observation, and for small claims, be sure to come very prepared with all your paperwork. Unfortunately, the courts won’t help you collect, but at least you would have a judgment in your favor. Good luck!


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