The Banks vs. Translators: What do freelancers think about how they get paid?

After you’ve done the hard work – it’s great to get paid. But getting paid is not always as straightforward as we might prefer it to be.

In a previous post I posed the question – Does the global banking system disadvantage translators?

To look at this question more closely, I carried out a small survey (n=40) to gauge how solo translators and small translation companies feel about getting paid – especially by customers in foreign countries [1].

In this post, I look specifically at how freelance translators responded to the survey.

Translators express their frustrations

I first asked the survey respondents to tell me what frustrations they typically have when getting paid by their customers – both direct clients and foreign agencies. Here are the topics that came up most frequently:

Comments from translators such as

Bank transaction expenses, late payments and lost income, e.g. due to exchange charges, fees paid to online services such as PayPal…

were typical.

While global banking is highly regulated, this doesn’t mean the system is particularly fair or designed in the interests of individuals who want to do business across national boundaries. Some of the available payment systems (including the commercial banks, PayPal and other international money transfer services) frequently make their money by charging fees to both the payer and the payee and then taking a good margin and other commissions on exchanging one currency for another. This can make international transfers of small amounts an expensive operation.

I asked the survey respondents how frequently they had to pay bank fees or other charges to receive their money.

80% of the translators surveyed regularly pay fees just to get their hard-earned cash into their bank account. Those who never pay fees typically contrive to avoid them by only taking on customers within their own currency zone.

My ‘foreign’ clients are intra-EU so there is neither currency nor fee issues (bank transfers are free). But that’s the reason I systematically refuse to work with US or Australian clients…

commented one respondent.

When asked how they felt about such bank fees, commissions and foreign exchange charges, over 62% of translators rated them as high or very high.

Whether or not foreign customers are willing to pay in the translator’s currency significantly affects the cost of getting paid. I asked the survey respondents to tell me who makes the decision about which currency they’ll get paid in.

Less than a third of the translators surveyed feel they are able to insist on being paid in their own currency.

Agreeing to be paid in a foreign currency carries a significant risk. By the time you get paid, (often a month or two later) the value of the payment, when converted into your own currency, will most certainly have changed. Sometimes you might be lucky enough to make some windfall profits, but on the other hand there is also the possibility of ending up disappointed that the “good price” you offered to your client has withered into a small loss… On top of that there is the cost of the forex conversion (which may include various fees and commissions some of which are not always disclosed). The exchange rate used to convert the currency may not necessarily be the best available or the most favourable to you.

The particular money transfer system selected is also an important consideration which affects the cost of getting paid. Comparing the costs of different payment providers can be tricky. I’ll look at this problem (and how to simplify it) in a future post. Banks and money transfer providers use a wide range of different built-in fees (many of which are often hidden) and apply different margins on the exchange rates etc. The differences can be substantial.

I asked the respondents to tell me who decides on which payment or money transfer system is to be used to pay them – the translator or the customer:

Less than a third of translators always insist on the method used to pay them.

Clearly, it would be of benefit to translators if they knew which payment providers could actually save them the most money. It would be even more important to know if their customers would actually agree to pay them via their preferred provider.

I asked the translators who they thought should be responsible for covering the costs of getting their money into their bank accounts – including any transfer fees and the currency conversion. 86% of translators thought that these costs should be covered by the payer, i.e. their direct clients or the translation agencies they work for.

86% of translators stated a preference for receiving their money in their own currency and 89% would prefer the payer to sort out the currency conversion so they didn’t have to worry about any loss of income from fluctuations in foreign exchange rates.

But the payers, the translation agencies in particular, have their problems too. In my next post I’ll look at the survey results which highlight the problems small and mid-sized translation companies face in making international payments to their freelancers.

Is there some sort of magic which would allow translators to quote their prices in their own currency to foreign customers – and actually receive that amount? A system which would  ensure that they got paid directly into their local bank account without the cost of foreign exchange conversions or any bank fees to just receive the money?

Wouldn’t this  go a long way to making the global marketplace an easier place for translators to conduct business?

The trick here is to ensure that both the payer and the payee get a benefit. I’ll look at the potential of this sort of “win-win” magic later in this series of posts.


Notes:
[1] Survey respondents were recruited via Twitter and were located across 13 different countries: Belgium, Canada, Egypt, France, Germany, Greece, Italy, Netherlands, New Zealand, Russia, Spain, UK and USA.

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11 Responses to The Banks vs. Translators: What do freelancers think about how they get paid?

  1. Very interesting Paul. Thank you for taking the trouble to look into this. I look forward to your next post.

  2. Paul,
    Thanks for raising this issue. Getting paid by foreign clients is of particular concern to US-based translators. My brother in Austria can open local business accounts in various major currencies to handle payments from international clients. I cannot do the same here in the US. In addition, US banks charge significant per-transaction fees for every incoming foreign transfer, even if the sender is paying all fees. Every time I use my US credit card to pay a company based elsewhere I pay a foreign transaction fee, even if the transaction is in US$. Major US accounting software also does not permit bookkeeping in foreign currencies, even though the Canadian version of the same software does allow multiple currencies. It seems US financial systems are rather parochial when it comes to small-scale foreign commerce.

  3. Pingback: The headache and heartache of paying translators. How LSPs feel about cross-border payments. #xl8 | The translation business

  4. Thank you, Paul for an interesting post.

    I used to quote in Euros to clients in Europe when Euro was high, but now I only quote my prices in US dollars because the exchange rates fluctuate so much.

    I always give potential clients a choice between wiring the amount to my bank account or paying through PayPal.

    It would be interesting if you could have in your next post a comparison of typical fees (perhaps one for a small amount and one for a relatively large ones) to compare how much we have to pay to have money wired to our bank vs. having it sent through PayPal or other means.

    I am pretty sure that some banks charge 15 dollars and some 45 dollars for the same thing here in US.

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  11. Tom says:

    I can suggest an alernative .

    If you use Foreign Exchange brokers you end up paying smaller fees and
    enjoy much improved exchange rates.

    The method is simple.

    You
    supply your employer with the bank details of the broker so they can be
    paid directly (removing the need for you to open an account in the
    respective currency, saving on any monthly fees). Once received the
    foreign exchange broker will then forward the GBP equivelant to your GBP
    account.

    I am a foreign exchange broker for a company called
    SGM-FX and we help many people in this way. If you have any interest in
    the above I would be more than happy to explain this in much more
    detail.Please contact me via email – tom@sgm-fx.com

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