| Pages in topic: < [1 2] | How big of a problem are long payment terms? Thread poster: Henry Dotterer
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Heinrich Pesch 
Finland
Local time: 04:57
Member (2003)
Finnish to German
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| From 0 to 40 days | Mar 12, 2020 |
Some of my clients pay at once when my invoice arrives. I do the same, why wait? A few clients pay after one month or a bit later. A few need a remainder or two. Funny those mails saying Your invoice is paid etc. My bank sheet will tell me that.
But I almost exclusively work with German or Austrian clients. Now there is a Spanish agency, after 6 weeks no reaction. Last time they needed a remainder.
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I've mentioned my story countless times here in the past decade.
Not long after 11 Sept 2001, I found out that one of my most active agency client at the time, based in Paris, had filed for bankruptcy.
Payments terms were 60 days end-of-month, therefore up to 3 months' credit, and towards the end they were late on top of that.
So when they ceased doing business, there were 2 months of business worth of arrears, and I lost 3700 euros in the liquidation.
Had I been o... See more I've mentioned my story countless times here in the past decade.
Not long after 11 Sept 2001, I found out that one of my most active agency client at the time, based in Paris, had filed for bankruptcy.
Payments terms were 60 days end-of-month, therefore up to 3 months' credit, and towards the end they were late on top of that.
So when they ceased doing business, there were 2 months of business worth of arrears, and I lost 3700 euros in the liquidation.
Had I been on 30-day terms, the amount due wouldn't have been that high.
Amazing, longer credit means increased risk! I think we learn that in kindergarten classes.
This experience has taught me a lesson:
* Monitor closely any drift in paying -> I've stopped working with a large agency after they'd been paying my first 3 invoices more than 1 month later than agreed. This agency was acquired 5-10 years ago after being on the verge of bankruptcy, I seem to remember.
* Never accept 60-day end of month terms -> I've chosen not to proceed with a number of prospects on such payment terms, on top of other conditions that certainly wouldn't have offset my opinion. I've also found that EOM + 60-day terms increases the likelihood of a client I don't want to work with anyway, due to other unreasonable requirements (hold harmless of losses up to $60M, extortionate discount grids, etc.)
* Every client can be replaced. Any idle time left by the loss of a client, however active, can be filled again at equal or better conditions in a matter of months by increasing your "time share" for incumbent clients or seeking and finding new clients during your added stand-by time. By the same token, every freelance translator can also be replaced.
In a nutshell, while I agree that long payment terms don't make any difference (when interest rates are low, as late JHL used to highlight) on my income stream when I have a sustained flow of assignments, it can have damaging consequences if I'm unlucky.
And frankly, a company that needs up to 3 months to pay a few hundreds or thousands doesn't transpire trustworthiness in my view, even knowing that freelancers are at the very end of the food chain and are meant to bear what other links won't. Agency sales reps accepting whatever payment terms to get the deal and transferring the hot potatoe to the little hands is not fair.
The fact that all my current agency clients pay spot-on at 30 days end-of-month, mostly without reminders, means that it's doable.
Philippe
[Edited at 2020-03-12 09:23 GMT] ▲ Collapse
| | | | | Not a problem... | Mar 12, 2020 |
Long payment terms are not a problem for me, if that’s what we’ve agreed from the very beginning. I’ve been working regularly (every month) since 2011 with an agency which pays like clockwork at 60 days. I have 5 clients who pay after two or three days, others within one or two weeks, most after 30 days. I haven’t had a single non-payment (touch wood!) for some time (two years)…
| | | | Jan Truper
Germany
Local time: 03:57
Member (2016)
English to German
Henry Dotterer wrote:
Hi folks. A question. We often hear about payment periods of 30, 45 or 60 days after job date, or delivery of work. At the same time, many clients pay faster.
What is your experience? How much does it matter to you how fast the client pays?
The payment period is one of several factors when I decide whether I take on a project.
The shorter, the better, and I don't do "60 days after end of month the job was invoiced", which can in effect be up to 90 days.
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DZiW (X)
Ukraine
English to Russian
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| Trans-form, trans-port, trans-late bd | Mar 12, 2020 |
Samuel, considering your rates and the average salary in your country, I do hope that your monthly half pay makes at least 2800 Euro net. To me, such a postponed payment spread is not the best incentive or riding high for a proper diversification, significant savings, moderate purchasing, and strict monitoring is a must, adding to the stress. Besides, without a stable income, one may have difficulties with paying the everyday living and regular bills, let alone mid/long-term planning the life an... See more Samuel, considering your rates and the average salary in your country, I do hope that your monthly half pay makes at least 2800 Euro net. To me, such a postponed payment spread is not the best incentive or riding high for a proper diversification, significant savings, moderate purchasing, and strict monitoring is a must, adding to the stress. Besides, without a stable income, one may have difficulties with paying the everyday living and regular bills, let alone mid/long-term planning the life and biz or emergency money. Every day is a prolix risk.
Unlike desperate newbies drowned into future payment schemes, you could partly overlap possible financial gaps. Yet still I wouldn’t call accepting longer that 30 days payment terms as a smart business decision--unless there’s a valid B2B argument.
I believe NO freelancers should have worse working conditions than employees.
Take care ▲ Collapse
| | | | | Longer payment terms = worse payment records | Mar 12, 2020 |
It's my experience that longer payment terms (such as 90 days) tend to be synonymous with poorer payment records. So 90 days can become 120 because the client "forgets" to pay. Coincidence? I don't think so.
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Thanks to everyone for offering your perspective. Thanks especially to Samuel for sharing statistics. Very helpful data.
| | | | | How about you, Henry? | Mar 12, 2020 |
What is your experience? How much does it matter to you how fast you get paid?
| | | | | Pages in topic: < [1 2] | To report site rules violations or get help, contact a site moderator: You can also contact site staff by submitting a support request » How big of a problem are long payment terms? | CafeTran Espresso | You've never met a CAT tool this clever!
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