Apr 18, 2011
Translation: "I have no time for occasional customers who require a translation in two days but need thirty days to pay."
When I read that little shocker in the twitstream of a colleague I respect a lot, I figured he was having a bad day as I often do, and then I chuckled to myself that Italian translators would surely like to trade places with him given their net-never world. It's a pretty fair bet that if a customer (agency or direct) in the "DACH" countries (the German speaking ones, where translation pays well enough that you can usually afford a roof over your head) takes more than the 30 days' standard from EU guidelines to pay, that company has major cash flow problems and should be handled with care (low credit lines or cash in advance), or they are simply shady. Or disorganized.
But 30 days? C'mon! In a B2B world, which is the one freelance translators mostly live in, some agreed time on that order of magnitude is usual practice. It is important to remember that private persons (B2C) should indeed usually be cash in advance or on delivery, and some project management systems such as OTM actually let you set default terms according to the type of business and your likelihood of carving out a pound of flesh with lawyers if the company turns out to be a deadbeat (i.e. "risk management").
In a well-run freelance business with prompt invoicing, cash flow should be relatively smooth on average, and there are well-known strategies for dealing with the potential "bumps in the road" from big projects (advances, milestone payments, just saying "no", etc.). And there are other options.
Recently, I went through a period where my cash flow was hit with a bucket of ice water from a combination of vehicle and moving expenses as well as a deliberate slowdown in billable projects to give me time to adjust to changes in my personal life and relationship status. With the additional recent addition to overhead of a kid starting university studies, it was clear that some action was called for. So I raised prices in a number of significant cases and introduced modest net 10 day payment discounts, which most clients were pleased to take advantage of. Problem solved quite nicely with very little effort on my part. My project management environment in OTM also enables me to do these little incentives as one-offs or a default for certain customers. This is a common practice in business, where prompt payment discounts typically run between 2% and 5%. I noticed a 10% discount being offered in a spam mass application that one of my agency friends forwarded to me tonight. Don't go there. An excessive early payment discount is stupid, as it only makes you look unprofessional and desperate. Stick to the usual percentages that a healthy business would offer.
There are probably other good strategies to encourage payment in less than 30 days, and if you've got one, please share. I have another informal policy that I implement quietly as a reward, though I can't say if the clients affected are even aware of it. I have a few clients who for years have made it a practice of paying invoices so quickly that I almost don't have time to lick the stamp to send them before the money is in my account. For some reason they often get priority in scheduling, and it's hard not to do the occasional spontaneous favor for someone who has you covered this way.
But do I blow off a customer who wants to pay me in 29 or 30 days or think ill of them? Certainly not. I screen the people and projects I work with carefully, and even the occasional customers who make timely payment after a month are part of a circle I appreciate deeply.