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Counterintuitive Cash Flow Management

The Surprising Benefits of Paying Translation Vendors Quickly, Even When Customers Pay Slowly

Million-dollar translation projects are supposed to make LSPs (language service providers) happy, right? The project managers in one unnamed North American agency had delivered one such project to the satisfaction of the Fortune 500 client, meeting all required technical and linguistic specifications. Everyone was already talking about the client’s next big project in the pipeline.

However, despite the successful delivery and promise of future work, project managers were frustrated, translators threatened legal action and company executives felt powerless to resolve the situation. So, what was the problem?

The problem – all too common in the language industry – was cash flow. The client had delayed payment for months and the agency consequently delayed its payments to translators. The problem dragged on long enough that dozens of translators had publicly trashed the agency’s reputation online. A barrage of emails and phone calls from unpaid translators was slowing project managers. The same managers could barely make project assignments because other freelancers now refused to work with a company gaining infamy for slow payment. And executives felt helpless to resolve the situation without the cash needed.

The finance department desperately pointed employees to a glimmer of hope; at least this large client announced it had finished working in those language pairs. Consequently, the agency might be able to search out a fresh batch of unwitting translators for the next big project while repairing relationships with the previous linguists. That faint hope was crushed when the client surprisingly continued with the same language pairs. Project managers and vendor coordinators could no longer recruit translators who refused to trust the company without payment in advance, service levels plummeted, and the client fired the agency.

The example above is one of the more extreme cases – although unpaid translators might call it deserved – but slow payment to freelancers is regrettably common in service industries. Such delays are common enough that New York City recently adopted a law to fine companies who fail to pay freelancers in full by a date set forth in writing or within 30 days of completing an assigned task.

Common Reasons for Slow Payment

Why are so many translation services companies slow to pay freelancers? The reasons are not usually as sinister as some translators might suspect.

Read the rest of this column in the July/August 2017 issue of MultiLingual: http://dig.multilingual.com/2017-07-08/index.html?page=22