What Do I Do if the Client Always Pays Me Late? (Adapt!)

I'll give you a straight answer: adapt.

It's not worth fighting over.

Or stressing over.

Just adapt.

Shrug it off and adapt your business model.

Your business model is far more adaptable than your clients' habits.

You get more and better rewards from adapting your conduct than from trying to adapt your clients' conduct.

Payment leniency is like any other need you can identify in the market — once you identify it, respond to it and profit.

There's really no point insisting on feeling offended/cheated/breached against etc. etc. when you can simply adapt and profit. And with a smile.

Challenges bring opportunities. Outplay life by taking the disadvantages it throws at you and converting them into advantages, coming out on top and profiting.

***

That said, here's some analysis:

What do you stand to gain if you press the matter?

Off the top of my head, I would expect a blend of conflict, guilt, apology and risk avoidance. In effect, probably:

• slightly faster payments but not always on time, and at a great energy/stress cost for the client that could be better spent
• a more strained relationship, with less goodwill capital than you could amass by being 'reasonable' and lenient
• a client less inclined to be forgiving when it's your turn to get late or otherwise slip (anything from stern to vindictive… or actually lenient and forgiving, putting you to shame)

So what if I don't? 

Off the top of my head, things don't change, which can be either good or bad but is more or less the whole point. Old facts, new approach.

Make the choice — given their payment delays, would you drop them or keep them, supposing you can't change the way they act (and possibly they can't either)?

If you choose to part ways, there's no reason to make the split any more hostile or awkward than it has to be.

If you'd rather keep them, it's counterproductive to keep complaining and putting a strain on the relationship. In fact, they could even just start to avoid hiring you and think they're doing you a favour.

So take a new approach. Stop feeling offended, cheated, ignored or whatever is the case. Shrug it off, let it go, stop allowing negative emotions to hold you hostage.

Instead, make it your own policy to extend an unspoken grace period that isn't the client's right but makes your client's life easier, and yours too.

Integrate those delays in your business model. Client payment punctuality is unreliable? Stop relying on clients to pay punctually — as long as they pay at all and don't take too long.

Just keep some floating cash. Don't spend or invest everything. Invest in liquidity and thus security. Your comfort and quality of life will increase dramatically as a result. Ridding yourself of liquidity anxiety will make it so much easier for you to project the calm confidence that wins your clients over as a professional. It will also make you friendlier, and a little relaxed and forgiving attitude (or at least reasonable, at a minimum) will not go unnoticed.

… It enhances your reputation, your goodwill. And that is a great asset and a great benefit to you. It may be intangible, but it has a great effect on your life and can make or unmake your success. Or at least have a very tangible effect on your income.

***

It's easier to get yourself a 'pillow' — a month's, then quarter's, then semester's, and then perhaps a year's worth of income retained as a reserve — than to challenge your client's habits. Besides, as a service provider it's generally a good idea to challenge your own habits and expectations before your client's. And that's not just a chore — like I said, it can make or unmake a successful practice.

And be positive. Don't be too hard on yourself. Perhaps you're already making more than some people you know who are less flexible than you are. Make that flexibility your strength and your policy.

… Doesn't mean it has to be your stated policy. In fact, as you've probably guessed by now, the whole point is that it shouldn't be! If you extend the deadlines, a lot of your clients will still be one or two weeks (or months, or days) late whether the deadline is two or four weeks (or months, or days). Give them a deadline, but don't expect them to keep it — and don't tell them you aren't expecting them to keep it. Just base your own internal calculations on official deadline + grace period.

If you choose to provide an official grace period, which may well be a good move in some situations, still provide an unofficial one after that and base your calculations on it rather than on the official one.

There, you solved your liquidity problem! You removed the anxiety and lack of security resulting from late payments from your clients, without even talking to them, much less straining your relationships.

***

Bonus tip: Consider (and I only say consider) a 3% discount for expedited payment, for example 3 days where the deadline is 30. Perhaps also consider a 1% deadline for not exceeding the 30.

The goal of the 3% discount is not to reward your clients for not being late (for not failing to do what they are already obligated to do). And, as you can see, neither is it the effect. The goal is simply to see the money in your account as soon as possible. Once in, it can't be taken out — unlike when it's still in your client's account/reserve/provision for outgoing payments, let alone the client's general account. You have the money, you no longer have to worry, and that's it.

More elaborate theory is that early, as opposed to timely, payment is a legitimate novel benefit for you. Reciprocally, you provide a legitimate benefit, a small financial concession. However named or classified, it's simply a small financial benefit, and getting emotional about the reason or classification makes very little practical sense.

The 1% discount for not exceeding the deadline obviously does reward your client for not breaching, but the reward is smaller, and the benefit is real. And you don't care about all that, remember? What you care about is that the money is already safely in your account, so the risk of non-payment is no longer there.

The 1% discount is reverse-interest. People feel bad about being penalized, or even confronted about doing something wrong, let alone when they see themselves as not being at fault — and agencies will typically not see themselves as being at fault when they haven't been paid by their own clients yet (get used to that, as you can't change it, at least not you alone and not overnight). Applying late interest or some other form of late fees or penalties will be an antagonizing move and will damage the relationship. By contrast, nobody can complain about not receiving a benefit one, through fault or no fault, just simply didn't qualify for. There are no accusations, no implications of wrongdoing, there's just simply a missed benefit.

Don't want to give up 1% or 3% of your current earnings? Up your pre-discount rates, problem solved. Suppose you charge 100. So now it would be 97, and you don't like that, which is fair. So you need to charge 103.09.

Naturally, changing your rates and payment conditions in tandem would be a bit too obvious and defeat the point of applying incentives instead of penalties, so perhaps wait till your next increase and rather than 105 make it 108. Or make it 105 but earlier. Or only with new clients, or new projects for occasional clients. How to give yourself a smooth raise is a whole different topic.

---

Recap: As a freelancer, one of your biggest competitive advantages is the adaptability of your small, lean, flexible structure (or even sometimes almost total lack thereof). You can adapt more easily than your clients. And you can also adapt more easily than some of your competitors (including freelancers who don't want to adapt). Use that adaptability and profit. If your clients fail to meet their obligations, try to see beyond the breach and see the need that you can respond to — and profit. This can include the need to adapt your business model to a longer payment cycle. Instead of trying to to turn the tide, you can invest your energy and creativity in using it to your advantage — and there are various ways of doing that. At the end of the day your need is liquidity and security, and that can be achieved in more than one way, and some ways are smarter than others. Be guided by pragmatism, creativity and… empathy. Think outside the box. You're allowed to! You don't have a boss to say you can't. Sometimes you can have your way in the big picture by agreeing to not have your way in small things that are ultimately inconsequential.

The Month's Proceeds Is Not Your Salary

Because of how translation is not a material product with a clearly visible cost structure and cannot be compared to other services easily, compensation of salaried employees is a natural point of reference.

Such comparisons are not necessarily correct, however. In fact, I would say in most cases they probably are not. They are more likely to be apples and oranges.

Here's why:


For starters, there is more to the total cost of maintaining a salaried position in a company than just the salary paid to the employee who fills that position. In other words, any function in an organization is more expensive than just the incumbent's salary.

Here are some examples of what the employer has to pay to keep a salaried position:

• 'naked' salary
• additional benefits and incentives, if any
• taxes and insurance
• paid holiday leave
• overtime pay (extra pay but often also extra rates)
• training, CPD etc.(usually at least a little, sometimes quite a lot)
• physical workplace — room, furniture, computer hardware and software, other specific expenses required for the job
• some tiny corresponding part of the organization's total costs and expenses — rent and bills, utilities, facilities, support staff, external services and everything else that's relevant

The applicability and size of these costs will vary from one situation to the next, but the point is that:

• any job or function in an organization costs at least a little more than the holder's salary
• freelancers pay anywhere from some to all of those costs out of their own pocket
• even if the 'employer' still has to pay some of those, the freelancer also does, unlike an employee, who does not
• freelancers only get unpaid leave — to take a month off and still have the same per annum, they would need to increase the invoices by 9% (to account for 11 rather than 12 months of actually working)

… Hence, comparing the totals on freelancers' invoices to 'naked' salaries of salaried employees for the same duration of a task is comparing apples to oranges, unless the freelancer is on an exclusive full-time (or non-exclusive significant part-time) contract with similar benefits to an employee.

You can't even subtract 'company expenses' from a year's worth of invoices and call it annual salary, let alone arriving at a monthly salary by dividing that by 12. This is because of the 'company' part, which — apart from actual costs and expenses — also include reserves and contingencies beyond what a salaried employee needs in private life.

More importantly, one can't — and that's the dumbest of all mistakes — just take a freelancer's invoice for a full day of work and multiply it by 365 and think that's how much the freelancer actually makes per annum! Nobody works 365 days! (And few people work 30-day months or 7-day weeks.)

See, a year has 52 weeks, which is 104 days off of the 365, then a variable number of public holidays and annual minimum paid leave that varies by country, from 0 in the USA to 38 in Austria and 52 in Iran, where a bit shy of 30 could be said to be the approximate intuitive average.

So it should be even more evident that one can't just say: 'An in-house counterpart makes 36.500 widgets a year, so we're going to pay you 300 widgets for three days of work,' and think that's sound logic, because it's not. 1/365 is a spending limit, not an earning target; even the greenest of all accountants or HR people should know the difference.

… And especially not when those days are longer than 8 hours each and an employee would be paid overtime in the same situation. For example, under Polish labour law 8 hours +4 hours overtime would add up to 15.5 standard hourly rates. Obviously, the very concept of recognizing overtime requires that 12 hours must be paid at least 12 hourly rates, not 8. This is normally absent from the per-project kind of contracts that freelancers usually work with.
 
To be on a level with salaried employees, a freelancer would have to work a maximum of 220–230 days a year and still make the same annual salary as salaried counterparts, increased by the kind of taxes and insurance contributions that self-employed people pay for themselves rather than having them paid by the employer, plus the value of whatever extra benefits salaried employees are getting that the freelancer is not, including overtime pay, and finally a sizeable extra to finance the 'freelancer' part, i.e. the fixed assets and overheads and other costs of the tiny 'home office' — computer, software, phone, increased utility bills, increased fuel consumption, occasional legal advice or litigation, the accountant's fees, marketing etc. — and some reserves and contingencies (such as replacing or repairing any broken equipment and being unable to work and earn money in the meantime).

Otherwise one simply needs to compare freelancers to solo traders and small-business owners. The  costs may be less than those of a solo firm or clinic, but the cost structure is still that of a solo practice and not that of a salaried employee.




Even if the freelancer in question functions more like a temporary worker, then there are still at least some costs associated with being self-employed that do not apply to salaried employees — and some benefits such workers don't receive while regular employees do, which means their respective wages are not directly comparable.

For starters, the idea of being a freelancer is not to work for the same money minus benefits, without paid leave and paying for your own equipment, unlike what some hopeful business geniuses seem to think.

Your Great Advantage: Flexibility

They say your greatest strength can also be your weakness. This is certainly the case with structure in translation agencies and corporate clients.

As a freelancer you don't have the benefit of structure, or only have it to a very limited extent, but therein also lies your strength which most agencies and most of your business clients don't have.

This isn't even necessarily come down to some sort of competitive comparison between 'you' and 'them' — why would you compete with your own client anyway? Rather, it equips you with the ability to offer something new, something different, something they aren't normally able to do.

Situationally, this allows you to fill their gaps, ones they can't fill on their own — and this give them more flexibility — and also to become a leader and agent of change, in spire of being so small.

Here are some of your unique advantages connected to flexibility and lack of structure:

• Direct access for your clients and partners to the top (and only) decisionmaker.
• No pipelines of any kind.
• Full clarity and no diffusion.
• No dissents or stale mates within management.
• Less waiting time for anything at all.
• More ability to negotiate than when two rigid giants meet.
• Much more efficient information flow (shorter, more direct, quicker, more expert).
• Typically next to zero need to comply with your procedures and bylaws, so there's all the less bureaucracy to deal with.
• You aren't normal workforce, so labour legislation doesn't normally apply to you.

So get the most out of them, rather than pretending you're something you aren't.

On the other hand:

• As the complete owner of your side of the bargain, you can make decisions a manager or representative would be fired for. You aren't going to fire yourself, are you?

Woah. What does that even mean? Well, for starters, you're allowed to think outside the box — if you allow yourself that. The thing is, it's up to you and no one else.

Next:

• You don't need to make every potential client an actual client.
• Not every inquiry has to lead to a successful 'sale'.
• Not every trip to the negotiation table has to lead to some form of understanding and compromise.
• You won't be fired for not taking on a client you'd rather not have.
• There's no higher manager to fire you for not meeting sales quotas and for wasting opportunities that didn't excite you much to begin with.
• Hence you can experiment more, as long as you're ready to live with the outcome.

You will need to live with the economic outcome for your business, but no one's going to intervene and punish you as a person, break your career, make you leave in disgrace, or even take away your quarterly bonus or chance of getting promoted. Nothing.

… The whole office drama of covering one's gluteus maximus is simply not there, so it's all the easier to just do your job.

Whether you cut costs or generate them, accept risks or avoid them — it's your decision and made to your standard, not someone else's, as you see fit. You want to just give something a chance for the benefit of experience and insight? You can. You want to take a more conservative course and stay within your comfort zone? You can. You can also employ a bunch of other criteria that corporate policies typically wouldn't even allow you to consider. So take advantage of it.