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Should I accept quarterly payment term?
Autor wątku: Techamba

Techamba  Identity Verified
Etiopia
Local time: 19:12
Członek ProZ.com
od 2013

angielski > amharski
+ ...
Dec 17, 2012

I have been in a long process of taking exams, registration and doing sample work. Finaly They accepted me. But I received an email to confirm with certain terms. I copied two of the terms below:

1. Payment terms – We will pay you in quarterly mode (i.e. payment against your service for Jan ~ March will be paid on 1st week of April upon receipt of your invoice.)
2. Billing cycle: monthly, POs for the month will be issued on last working day of that month
... See more
I have been in a long process of taking exams, registration and doing sample work. Finaly They accepted me. But I received an email to confirm with certain terms. I copied two of the terms below:

1. Payment terms – We will pay you in quarterly mode (i.e. payment against your service for Jan ~ March will be paid on 1st week of April upon receipt of your invoice.)
2. Billing cycle: monthly, POs for the month will be issued on last working day of that month


Is it safe to work for months before being paid?

The company seems to have good name, from the website and email domain.

Please advise me.

Thanks.


[Edited at 2012-12-17 10:24 GMT]
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Angelique Blommaert  Identity Verified
Holandia
Local time: 17:12
niemiecki > niderlandzki
+ ...
Tricky Dec 17, 2012

If I was in your position I wouldn´t know what to do. On one hand your language pair seems rare to me, so I guess they really want you to work for them. But on the other hand, it´s a lot of money (time) you spent and have to wait for, THREE whole months.

Maybe you can ask them why they use these terms, and if they can guarantee you that the invoice you will send them on the last day of March will be paid in the first week of April as they asume.


 

Mailand  Identity Verified
Local time: 17:12
Członek ProZ.com
od 2009

włoski > niemiecki
+ ...
Right, tricky ... Dec 17, 2012

It's true that the work you do at the beginning of January will be paid only 3 month later, but what you do at the end of March will be paid quite early (from the point of view of someone having to deal with terms in Italy ....).
If the work is interesting, the company reliable - personally, I'd give it a try, especially if it's a continuous work flow.


 

Sandra Peters-Schöbel
Niemcy
Local time: 17:12
Członek ProZ.com
od 2007

angielski > niemiecki
+ ...
think of your monthly expenses Dec 17, 2012

Hi,
I know how hard it is to get into the business, but I can only tell you NOT to accept this payment.
Supposed it is a serious agency that is really going to pay you for your work, they are trying to get the money from their clients first before paying the translators. Doing this they have no risk themselves.
But actually they are a business company with larger financial means and you are a single working person, so that's not fair.

But the most important thin
... See more
Hi,
I know how hard it is to get into the business, but I can only tell you NOT to accept this payment.
Supposed it is a serious agency that is really going to pay you for your work, they are trying to get the money from their clients first before paying the translators. Doing this they have no risk themselves.
But actually they are a business company with larger financial means and you are a single working person, so that's not fair.

But the most important thing is:

You have fixed monthly costs (rent, food, insurances, taxes....) which will be impossible to cover if you receive your money about 14 weeks later!!!
Most of the agencies I am working for are paying after 45-60 days now instead of 30 days, most of them taking the "financial crisis" as an excuse.
I have to pay my invoices for the things I bought after 14 to 30 days at the latest, so there is already a large gap.
I am experiencing that I have no possibility to work a little more before a vacation or if something unforeseen has happened, because I won't get the money earlier than after 60 days.

So, if you do not happen to have dozens of clients paying on time after 30 days I would say it will be impossible to survive (financially). The tax authorities will not accept any delayed payment.

I would suggest to write a polite email to the agency, thanking them for accpeting you, but telling them that their payment terms are impossible to accept for a single working freelancer.

Sorry,
keep up trying, but without ruining yourself...
Sandra
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Steffen Walter  Identity Verified
Niemcy
Local time: 17:12
Członek ProZ.com
od 2002

angielski > niemiecki
+ ...
Don't accept these terms Dec 17, 2012

This all boils down to a very simple question: Are you planning to run a money-lending outfit or a translation business? If the latter, this payment term is plain unacceptable and should be rejected straight away.

 

Monika Rozwarzewska  Identity Verified
Wielka Brytania
Local time: 16:12
Członek ProZ.com
od 2006

angielski > polski
+ ...
A piece of advice for future Dec 17, 2012

Always discuss payment terms BEFORE getting angaged in a recruitment process. I do that to save time and effort (sometimes a lot of effort) for both an agency and me.
As for this payment term, I do work for one agency that pays after three months after receiving an invoice but since they are not my key client, I don't mind


 

neilmac  Identity Verified
Hiszpania
Local time: 17:12
hiszpański > angielski
+ ...
As long as they DO stump up Dec 17, 2012

I'd be happy with the condition, AS LONG AS I was confident that they were able and willing to pay. Three months is only 90 days and I have a couple of clients (one agency with a good BB rating) who work this way, although sometimes they do pay sooner.

Of course, if you have no guarantee that the client will fulfil their end of the bargain, then it's quite a risk, but I'll repeat this again, I don't see 90 days (one quarter) as an inordinately long time to wait for payment. Those w
... See more
I'd be happy with the condition, AS LONG AS I was confident that they were able and willing to pay. Three months is only 90 days and I have a couple of clients (one agency with a good BB rating) who work this way, although sometimes they do pay sooner.

Of course, if you have no guarantee that the client will fulfil their end of the bargain, then it's quite a risk, but I'll repeat this again, I don't see 90 days (one quarter) as an inordinately long time to wait for payment. Those who do must never have worked for Spanish government offices...

[Edited at 2012-12-17 12:53 GMT]
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neilmac  Identity Verified
Hiszpania
Local time: 17:12
hiszpański > angielski
+ ...
Nothing ventured Dec 17, 2012

Mailand wrote:

If the work is interesting, the company reliable - personally, I'd give it a try, especially if it's a continuous work flow.


Exactly. It could be an ugly frog or a handsome prince, but unless you try it out you'll never know!


 

John Cutler  Identity Verified
Hiszpania
Local time: 17:12
hiszpański > angielski
+ ...
My thoughts too. Dec 17, 2012

Steffen Walter wrote:

This all boils down to a very simple question: Are you planning to run a money-lending outfit or a translation business? If the latter, this payment term is plain unacceptable and should be rejected straight away.


Yes, it all depends on you. Are you willing to give an interest free 90 day loan to these people? They sound very under capitalized and you're the one who'll be paying for that.


 

José Henrique Lamensdorf  Identity Verified
Brazylia
Local time: 14:12
angielski > portugalski
+ ...
In Memoriam
Carve that in stone! Dec 17, 2012

Steffen Walter wrote:
This all boils down to a very simple question: Are you planning to run a money-lending outfit or a translation business? If the latter, this payment term is plain unacceptable and should be rejected straight away.


... or perhaps have it as a marquee on the top of your monitor screen.

I can't figure out why, but there are just too many translation outsourcers (actually most that exist on two European peninsulae - Iberia and Italia) out there that treat translators as a source of interest-free loans.

Translations cross borders freely, however some goods cost differently depending on where. I guess that bananas in Siberia should be about as expensive as cherries in Brazil. Money is not different. This table shows, for instance, that the time value of money (aka interest rates) is now almost 10x higher in Brazil than in the Euro zone.

So if someone living in the Euro zone decided to get a loan (equivalent to buying translation services on extended credit) in e.g. Brazil or Egypt, it would be as sensible as importing bananas from Russia, or cherries from Brazil.

I see you are in Ethiopia, where apparently monthly interest rates are 8%. Assuming sdl.com is in Germany (Euro zone), where the same rate is 0.75%, if you rightfully added the financial cost to your translation cost, you should increase your rates for three months by (8.00 - 0.75) x 3 = 21.75%. This means that your client would be literally wasting down the drain $217.50 extra on every $1,000 worth of translation they paid you.

Such insane financial management tends to indicate that three months later, when your payday comes, this client is likely to be bankrupt, therefore, answering your question: No! It is definitely unsafe.


 

Jaroslaw Michalak  Identity Verified
Polska
Local time: 17:12
Członek ProZ.com
od 2004

angielski > polski
SITE LOCALIZER
Get a hammer Dec 17, 2012

José Henrique Lamensdorf wrote:
I see you are in Ethiopia, where apparently monthly interest rates are 8%. Assuming sdl.com is in Germany (Euro zone), where the same rate is 0.75%, if you rightfully added the financial cost to your translation cost, you should increase your rates for three months by (8.00 - 0.75) x 3 = 21.75%. This means that your client would be literally wasting down the drain $217.50 extra on every $1,000 worth of translation they paid you.


Jose, what if one of your clients told you that they have to extend the payment period to 90 days, but to compensate that they would double your rates? Would you tell them it is simply unacceptable or would you rather go to get the hammer and the chisel?

The 8% rate is for the local currency (most likely due to high inflation). We do not know if the client is local and willing to pay in local currency, but it is very unlikely (such business terms would simply not make any sense then). It is more probable that the poster is negotiating his rates in dollars or euros, so the quoted interest rate does not apply here. In other words, it has nothing to do with the situation described.

Why exactly is "money lending" unacceptable? And why on Earth would that be "interest free"? It is a perfectly valid business proposition, you just have to calculate how it is going to affect your bottom line. The simplest solution is, of course, to factor the interest rate into your translation rate. That is, the early paying clients get a better rate and the late payers get a higher rate.

As I understand, the original poster's situation is a bit more complicated. We have two issues here: cash flow (that is if he can afford to wait for so long - that depends on his current funds) and the risk (of not getting paid). I am afraid that this is the decision the poster has to make for himself anyway - we do not know his current financial standing, whether he has other prospects, etc. Also, the relative level of the negotiated rate comes into play - if they pay very well, you might decide that it offsets the "lost" interest. If they pay peanuts from the start, then delayed payment only makes it worse, i.e. it might make an otherwise acceptable cooperation unviable.

One option might be to ask for a "trial period". That is, they could declare to pay for the work done in the first month within a month, for the second one within two months, then they can pay after three months, as proposed. This might depend though on how beauricratic they are (which in itself is a valuable info on the partner).

[Edited at 2012-12-17 12:00 GMT]


 

José Henrique Lamensdorf  Identity Verified
Brazylia
Local time: 14:12
angielski > portugalski
+ ...
In Memoriam
You got the idea! Dec 17, 2012

Jabberwock wrote:

José Henrique Lamensdorf wrote:
I see you are in Ethiopia, where apparently monthly interest rates are 8%. Assuming sdl.com is in Germany (Euro zone), where the same rate is 0.75%, if you rightfully added the financial cost to your translation cost, you should increase your rates for three months by (8.00 - 0.75) x 3 = 21.75%. This means that your client would be literally wasting down the drain $217.50 extra on every $1,000 worth of translation they paid you.


Jose, what if one of your clients told you that they have to extend the payment period to 90 days, but to compensate that they would double your rates? Would you tell them it is simply unacceptable or would you rather go to get the hammer and the chisel?


FYI I've told "no" to a few clients like that. My view is that such unsound financial management will cause them to no longer be in business when my payday comes.

This table compares interest rates between various Brazilian banks. These are professional financial services organizations that compete on who offers the lowest rates. The ones offering low rates here are the smaller ones, and obtaining a loan there would require large collaterals, while credit availability would be quite limited.

Jabberwock wrote:
The 8% rate is for the local currency (most likely due to high inflation). We do not know if the client is local and willing to pay in local currency, but it is very unlikely (such business terms would simply not make any sense then). It is more probable that the poster is negotiating his rates in dollars or euros, so the quoted interest rate does not apply here. In other words, it has nothing to do with the situation described.


On the contrary. Brazil had a three-digit inflation until July 1994, when it was suddenly halted, and kept down ever since. FYI my domestic translation rates have remained unchanged since. All the productivity gains from IT developments have handsomely covered the inflation ever since.

Now and then I have to adjust my rates for radical exchange rate variations, however this doesn't happen often. Brazilian government for the past two decades or more has been overprotecting the banks' profitability and, to ensure the ongoing growth and development, the cost of capital here (= interest rates) is extremely high.

Jabberwock wrote:
Why exactly is "money lending" unacceptable? And why on Earth would that be "interest free"? It is a perfectly valid business proposition, you just have to calculate how it is going to affect your bottom line. The simplest solution is, of course, to factor the interest rate into your translation rate. That is, the early paying clients get a better rate and the late payers get a higher rate.


It's unacceptable on the grounds of specialization. Should translation jobs be assigned to banks? AFAIK no bank offers such services. So why should translators offer money lending?

I am not talking about currency exchange, assuming that any payment in dollars or euros can be converted into the translator's local currency for them to pay their bills.

My point is, assuming the client has no way to pay the translator within less than 60-90 days, which one of these makes more sense:
  • The client (supposedly in Germany or anywhere in the Euro zone) borrowing money for this period at 0.75% per month to pay our fellow translator; or
  • Our colleague in Ethiopia borrowing that money at 8.0% per month to pay his bills in the meantime?


Jabberwock wrote:
As I understand, the original poster's situation is a bit more complicated. We have two issues here: cash flow (that is if he can afford to wait for so long - that depends on his current funds) and the risk (of not getting paid). I am afraid that this is the decision the poster has to make for himself anyway - we do not know his current financial standing, whether he has other prospects, etc. Also, the relative level of the negotiated rate comes into play - if they pay very well, you might decide that it offsets the "lost" interest. If they pay peanuts from the start, then delayed payment only makes it worse, i.e. it might make an otherwise acceptable cooperation unviable.


Here is where I notice that you got the idea. Our Ethiopian colleague must pay his bills in the meantime. Either he is well "loaded" with cash, so it doesn't bother him, in which case he will be giving away (8.0 - 0.75)% to his Euro client, unless he increases his rates. If he increases his rates and that Euro client accepts this, that client will be managing their money in an ostensibly stupid manner. If our translator doesn't increase his rates and doesn't have funds to pay all his bills in the meantime, he'll need to get a loan, and will be paying the 8% interest from his future income.


After many experiments, I finally set up a system that separates the translation costs from the financial costs. My standard rate is set for payment in two weeks via PayPal. As PayPal deducts (6.5% in fees + 3.5% in lower exchange rates =) 10% from my pay, I offer a 10% discount to any client willing to use any other payment method. Clients paying (outside PayPal) in two business days get a 16.6% discount.

Now PayPal delays the actual funds transfer to my account for up to something between two business days and two weeks. In the worst case, I'll be receiving in one month. Some outsourcers simply can't pay within less than 30 days from delivery. I advise them, and they are put on what I call 'managed availability'. This means that their jobs will lose priority to any normal-paying one that comes up. Though they shouldn't consider me as an option for urgent jobs, some live happily with it.

As a general rule, I turn down any job offer paying beyond 30 days from delivery. The only time I took a 60-day paying (urgent) job, that established outsourcer completely vanished before payday, leaving no trace whatsoever.

I understand that all this applies only to translators living in a country where interest rates are higher than their clients'. Yet it is a workable solution until the day banks begin offering translation services.


To complete the picture, here in Brazil, when you buy e.g. a car from a dealership or an appliance at a department store, if you want to pay for it in installments, you'll be directed to someone strategically placed there: it will be an employee of a financial institution, a company independent from the store itself, though sometimes belonging to the same group. Such merchants focus on selling, and leave the financing to specialists.

So if large sales organizations leave the financing of their merchandise to specialized companies (viz. banks), why should freelance translators be forced into the international money lending business?

[Edited at 2012-12-17 13:14 GMT]


 

Jaroslaw Michalak  Identity Verified
Polska
Local time: 17:12
Członek ProZ.com
od 2004

angielski > polski
SITE LOCALIZER
Oversimplification Dec 17, 2012

José Henrique Lamensdorf wrote:

I am not talking about currency exchange, assuming that any payment in dollars or euros can be converted into the translator's local currency for them to pay their bills.



Well, the problem is that if you exclude inflation and changing currency rate, the picture is so incomplete that it makes no sense. And by the way, lending interest in Ethiopia is 7.5% per year. http://www.combanketh.com/loansadvancesDom.php I cannot get a reliable info on inflation, I suppose the poster could give us a correct number.

By the way, the same bank page states the savings account interest is 5%. Just have a look at the exchange rates within 90 days: http://www.exchange-rates.org/history/ETB/EUR/G/90

So, if in June an imaginary translator got a payment from a perfect client on the very job he delivered the assignment, he got:

EUR 100 = ETB 2350

He put it all dutifully to a savings account, at 7.5% p.a. After three months, he has:

ETB 2373,38

Now the poor victim of the system delivers his job in June. He gets paid today:

EUR 100 = 2385

The horror.

Did the second translator really earn something by getting paid late? Of course not - if the first translator put his money into a Euro savings account, he would be ahead about EUR 0.20. That is the actual "translation agency lending rate" - pretty negligible, if you ask me. In fact, any shift in the translation rate (in either direction) would make the "lending rate" argument irrelevant.

Unless my data or calculations are terribly wrong... as they well could be. After all, I am a translator, financial management of my business is just for fun

[Edited at 2012-12-17 14:25 GMT]


 

Tomás Cano Binder, BA, CT  Identity Verified
Hiszpania
Local time: 17:12
Członek ProZ.com
od 2005

angielski > hiszpański
+ ...
Accept the terms.... Dec 17, 2012

...but only work for them in the last month of each quarter, and reject the rest of the jobs to devote your time to other customers.

 

José Henrique Lamensdorf  Identity Verified
Brazylia
Local time: 14:12
angielski > portugalski
+ ...
In Memoriam
I stand corrected Dec 17, 2012

Jabberwock wrote:
Well, the problem is that if you exclude inflation and changing currency rate, the picture is so incomplete that it makes no sense. And by the way, lending interest in Ethiopia is 7.5% per year. http://www.combanketh.com/loansadvancesDom.php I cannot get a reliable info on inflation, I suppose the poster could give us a correct number.


The page where I got this info did not mention the term anywhere.

However it seems to be generally poor financial practice to force long payment terms onto translators in Brazil, Egypt, Colombia, Indonesia, Poland, Turkey, Chle, China, and possibly a few others, if the outsourcer's domestic interest rate is significantly lower.


 
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