A dear colleague just shared this gem of a business risk story with us. The following is an excerpt of an e-mail that our colleague received from an agency (which shall remain anonymous):
As I'm sure you are aware, the global economic situation is still very problematic and we have experienced the following effect:
- The majority of our clients have extended their payment terms from 30-45 days to 60-90 days.- Clients have been requesting big discounts in rates.
All language service providers are experiencing similar difficulties.
Due to all this, we have been forced to take some measures to remain competitive in this market, but do not believe that reducing vendor rates is an appropriate action to take. So, we have decided to adjust our providers' payment terms to more closely match our clients' payment terms.
Effective immediately, our vendor payment term is changed from 30 days to 60 days.
This is a measure we very much regret to take, but we hope that you can understand our situation and why we have taken this decision.
What's wrong with this picture? It's simple: the language service provider (or agency) has a payment obligation to the contractor. That payment obligation is independent of the agency's contractual payment agreement with the end client. Language service providers need to have funds available to pay contractors what they are owed on the day of the agreed-upon payment. It's possible that the language service provider's situation might have changed between the time when the project was delivered and when payment is due (usually 30 days), but the payment obligation remains. Running a business comes with some risks. Passing that business risk on to the weakest link -- in this case, the freelance linguist -- is unacceptable.
If a freelance linguist enters into a contractual agreement to provide a translation of a contract with XYZ agency and the linguist delivers in accordance with the terms, she is legally entitled to payment. XYZ agency can't come back and say "Sorry, the dog ate our client," "The client went out of business," "We are so poor, we are barely covering our costs and the client hasn't paid" or similar non-sense lines. Even if these lines are true, the payment obligation doesn't magically disappear.
We do not work with agencies, but our response to this would be the same as our colleague's: request to be removed from that particular agency's database. We'd love to hear your thoughts. While these are certainly tough economic times, language service providers need to find ways to prosper without alienating their most important asset: their people.