Sooner or later, every professional linguist will be confronted with a customer who doesn't pay for services rendered. While this is highly annoying, it's important to remember that it's usually not personal, but it sure does feel personal when you aren't compensated for your hard work, doesn't it? Now, just like most of our colleagues, we have been very lucky that in more than a decade in business, as we've only had a few non-payers.
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| Photo by Judy. |
We've had this great payment record because we ask for payment in advance when we work with non-corporate clients, only work with people we trust, and make sure that we have addresses and contact information for all new customers in case a dispute arises. In addition, every customer has to sign a contract agreeing to our price and terms, and that document would come in really handy if we had to go to court. In addition, in the rare case that we work with an agency for an interpreting case, we check their rating on the invaluable Payment Practices website. In spite of all these precautions, once in a while a customer hasn't paid, and here are some of the steps we've taken to remedy the situation.
- Our payment terms are usually net 30, and if payment has not arrived after 45 days or so, we send a kind follow-up e-mail in very nice terms. Sometimes the check is in the mail (whether that's true or not) and sometimes something has slipped through the cracks, which can happen. If the customer did not have the intention of paying us promptly, this e-mail serves as a nice reminder that we are very much on top of our accounts receivable. In those cases, the situation is usually remedied very quickly.
- If we don't hear back after that first e-mail or the customer is not too responsive, we call a few days later and/or e-mail and calmly remind the customer that we had a signed agreement, that services have been rendered and that we would like to get paid for our services in accordance with said agreement. If we don't get the response we need via e-mail or phone, we send a certified letter that the customer has to sign for and include the overdue invoice.
- If there is still no appropriate response after several e-mails, phone calls and the certified letter or if we get an excuse along the lines of "the check was lost in the mail" and more than 90 days or so have passed, we send another letter saying that we need to resolve the matter by X day before getting a third party involved. We've only had to use that strategy a few times, and it's worked.
- If all else fails, we take the matter to a collection agency (the ATA partners with RMS; we once referred an account to them that they did not manage to collect, so there was no fee) or, if the client is in the same jurisdiction as we are, another option is to take the client to small claims court. With a signed contract in hand, the case should be relatively clear, but even if you win, it's up to you and not the court to collect the outstanding amount. We've never taken anyone to small claims court, but in Europe, one of our clients filed for bankruptcy and we have a collection agency representing us in the bankruptcy proceedings. We are basically a low-level creditor to the company, and the odds of collecting are low, but it's worth the try.
- On a few occasions, and if the client is in the same city, we have asked someone we trust to go the client's office and kindly tell them that they would wait until the check is issued. This is uncomfortable for all parties and usually yields the intended result: payment.
What about you, dear colleagues? How have you resolved non-payment issues? And how do they make you feel? As much as we know non-payment is not personal, it's still tough to deal with. We'd love to hear your comments and ideas.
10 comments:
Several translators from various European countries had a number of invoices unpaid by a British agency called Premier Language. The small claims court was a relatively frictionless process (also free), and, though the ruling was in our favor, the agency never paid any of us, and the collection agency failed to get the money from them. After discussing the case with a lawyer, it turned out that it wasn't worth suing them and going through a regular legal process, unless the unpaid amount was in the (many) thousand-Euros range. And, of course, that would imply spending a huge amount beforehand. So I guess unless you find an amazing collection agency, you're basically screwed for whatever amount you're owed. It always rattles me to remember this case; and thankfully in case the amount was not huge. Other colleagues had it much worse.
Thanks for this great post on a topic that, sadly, affects all of us at one point or another! I agree with you that a) the best defense is a good offense: once it progresses to the collections/small claims stage, the chance of actually collecting are minimal. So, do everything you can to avoid things getting that bad, and b) no matter how carefully you set things up, once in a while you will be burned. Like you, I've (thankfully) only had to deal with a handful of non-payers. But one of them was an agency that a trusted colleague had worked with for over 10 years, and the agency suddenly and unexpectedly went out of business without paying me for a fairly large job. Phone calls went unanswered, they refused to sign for a certified letter that I sent, and so on. It doesn't happen often, but that's life as a freelancer!
Thanks for another very good post!
I would also add that in case the client is a regular one, we should insist on being paid undue invoices before taking on any new project (trickier with direct clients, of course, but let's put our foot down!).
Otherwise, we might end up being owed thousands of dollars/euros/pounds. I have heard colleagues say that a single client had been owing them sums between 3000 and 10000 euros for months and my first thought was: why did you go on taking their projects for so long without getting paid?
@Ángel: Thanks for your thoughtful comment and for sharing information about this very unpleasant experience. It sure does go to show that the courts aren't perfect, and that winning a case, which we are glad you did, doesn't mean you will get paid. How disappointing! The best strategy really is to protect yourself before you start working for anyone, as much as that's possible. We are essentialy giving credit (for free) to all our customers, and sometimes the thought of that can be quite scary.
It's also quite disappointing to hear that the collection agency wasn't able to collect. We had the same experience when we sent one of our accounts to collections, but the amount was very small. We ended up having to write it off.
@Nelia: You are very welcome! And yes, we absolutely agree with your point -- thanks for sharing it. Clients' accounts should definitely be current when you take new work from them. It just makes financial sense and also provides some much-needed leverage (=please pay me or I won't accept any more work from you). We are also oftentimes surprised that colleagues will keep on accepting work from clients who have not paid. We think that's a poor strategy, as non-payers have a habit of being repeat offenders.
Many thanks for your thoughtful comment!
@Corinne: Thanks for reading and for commenting! We love hearing from you here, as you always have such great examples and insight. Yes, protecting one's business interests in the early stages of any transaction is key. It's great that you have only had a few non-payers, but these sure are frustrating, aren't they? Of course, of 100 clients who are lovely and pay on time every time, one does have the tendency to remember the one who does not. Sorry to hear about that project that went unpaid, but sounds like you sure did try to collect it....
The very uncomfortable truth is that it is very easy to get away with not paying a relatively small amount - and even more so when it is a cross-border transaction.
The good news is that most people are generally honest; one just have to complete a basic due diligence and know one's terms of service.
For new client I always set up a reminder to track the payment around the due date.
One of the biggest mistakes business owners do (and I was sure guilty of this at the early stage of my career) is neglect payment collection. It is easier to send and invoice and forget about it (trusting that the money is virtually in the bank), while keeping busy taking on new projects. This is part of why many businesses fail, because it creates a cash flow problem and even debt.
It is therefore crucial to keep track of outstanding invoices, and make sure to follow some best practices to minimize the chance of identifying potential non-payment risks in advance.
That said, non-payment is always a business risk and cannot be avoided completely, but it can be managed and minimized.
For example, I knew a colleague who had to deal a lot with non or very late payers. He was understandably very frustrated by it. When we talked about it at one occasion I told him that if this is a regular feature, he must stop blaming the non/late-payers and instead reconsider his business practices; for example, stop bidding on project on bidding platforms which in my experience tend to attract a high rate of certain type of outfits with questionable payment practices.
This is surely a business risk, but risk can be managed.
True words. I think therefore it is always important to try to get as many clients as possible and not to rely on 1 "big fish" for a period of 1-2 months. Because if the client had to fill in for bankruptcy, he/ she can easily take you with him/her.
@Shai: Thank you so much for your very thoughtful and interesting comment. We very much appreciate it. And we completely agree that due diligence is key and of course follow-up as well. It's very true that many times we just prefer to stick our head in the sand rather than deal with the unpleasantness of having to collect/follow up/make unpleasant phone calls, but it's just part of the business, and we need to get paid for our services.
Interesting anecdote about your colleague: once a client hasn't paid you once or twice, you need to take that relationship to the next logical step, which is to refuse to work for that client unless they provide pre-payment. Anything else would be neglecting to protect your business interests, and as your colleague found out, it results in much frustration and unhappiness.
And yes, most people are very honest. If you think about it, it's a scary situation for every small business, though: providing free credit to all clients....but most of the time it works out just fine.
@Anonymous: Good point indeed. We also like to ask for a deposit of a certain percentage of the job total if the client wants us to work on his/her project almost exclusively for a certain period of time. That serves to avoid the problem that you bring up. Thanks for reading and for commenting!
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