Paying translators – let’s stop tearing out our hair and just fix the system!

Dear Translator,

XYZ Translations is a leading language service provider in London, UK. Attached, please find a document in German which we need to have translated into US English. It is an analysis of the German market for fixed-income government bonds denominated in euros. The English version is intended for a sophisticated readership in the USA. If you are willing to take on the work, we propose a fee of £250…

Frank looked at the email. An American translator well versed in the intricacies of translating financial material from German, he has always relied on local US clients and LSPs for work. An offer like this, from a foreign customer, could be a great opportunity to expand his client base.

“Now, what does £250 mean in dollar terms,” he wonders. ” … how many US cents per word would I be earning?”

Frank does a quick word count of the German document and, using his trusted conversion formula, he estimates that the finished job would be about 3,200 English words.

Now he needs to figure out what £250 is in US dollars. He remembers how to use Google’s quick currency converter and types “250 GBP to USD” into Google’s search box:

“Now, $392 divided by 3,200 is just over 12 cents a word.” he figures. “OK, it’s a bit on the low side for a text like this, but it’s a good start and it will be great to have a new customer in the UK.”

He emails his acceptance of the job to his new London customer.

Has Frank just set himself up for one big disappointment?

The job proceeds without a hitch and Frank delivers his translation on time. XYZ Translations are delighted to have a financial expert on their team and are very happy with his work.

The day duly arrives when the agency wants to pay Frank the £250 they promised.

Veronica, the responsible project manager at XYZ Translations, logs into the company’s online bank account and looks for an “international money transfer” function. She sees a bewildering array of options and finds that charges to send money abroad range from £9 to £30 per transaction [1]. The difference seems to depend on the destination country, on how long it will take to deliver the money and on whether the transaction is processed by the customer online or through a bank employee.

Unfortunately, the list of countries for the cheapest option doesn’t seem to include the USA and while the “Priority Payments” option is available for the USA, it’s the most costly at £30 per transfer. To Veronica this seems like a lot of expense just to wire £250. She notes, however, that if she avoids contacting the bank by telephone (or in person) and completes the whole transfer process online, it will only cost £17.

She selects the £17 option and clicks the “Make a transfer” button and is then prompted to enter the amount she wants to pay. She enters £250.

Has Veronica just made a big mistake?

She doesn’t realise that the bank’s £17 transfer fee is going to be deducted from the £250 she is supposed to sending to the USA. Poor old Frank’s earnings have just dwindled down to £233!

The bank’s online system automatically calculates how many US dollars it will send at the bank’s current exchange rate of £1 to $US 1.5078 [2].

Frank’s £233 is duly converted to US dollars and is dispatched to his account at Bank of America. Some days later, Frank is notified that the payment has been credited to his account.

He looks at the amount in disbelief!

No, not the $US 392 he was hoping for!

No, not even the $US 351 which was dispatched from London by Veronica a few days ago.

Frank sees a deposit of only $US 335!

Is this some sort of mistake? Poor Frank hadn’t figured that his own bank would also deduct a further $US 16 as a “receiving fee” [3].

Franks does a quick calculation and divides his final payment by the final word count of the job he delivered. To his horror, he discovers that he has worked for only 9.5 cents per word – a far cry from the 12 to 15 cents he usually receives from his local US customers. His final payment shrank by almost $US 60 from his original expectations.

Something’s not right here…

XYZ Translations have paid the £250 they had promised to Frank and feel that they have fully honoured their obligations. But all the costs of getting the money across the Atlantic into Frank’s bank account were entirely at his expense.

Now, let’s replay the story…

… but this time, Frank is a bit wiser to how the system works.

Frank gets the offer of £250 from XYZ Translations. He does his word count, checks the online exchange rate on Google and again decides that he’s happy to settle for $392. But this time his reply is:

“Dear XYZ Translations,

Thank you for your offer of £250 for the German to English job. I note that at today’s exchange rate (1.5707), which I checked on  Google, your proposed fee is equivalent to $US 392. I would be happy to undertake your project for this amount, plus the $US 16 fee my bank charges to accept foreign payments – i.e. $US 392 + $US 16 = $US 408.”

What are XYZ Translations going to make of this?

Veronica looks at Frank’s response and figures that Frank only appears to be asking for an extra $US 16 over her original offer of £250. Using the same exchange rate quoted by Frank, she figures that that’s about £10. Veronica decides that it’s not such a big amount so she quickly agrees and the project proceeds.

Has Veronica made a costly mistake?

It’s now payday again. Veronica’s task is a little different this time. She has to figure how many pounds she needs to pay to ensure that exactly $US 408 is sent off to Frank.

Let’s assume that the GBP:USD exchange rate applied by XYZ’s local bank in London is still £1 to $US 1.5078 [4]. Veronica multiplies $US 408 by the inverse of the exchange rate (1 divided by 1.5078 = 0.6632) and discovers that she needs to pay Frank £270.

Hmmm… that’s not an extra £10, but £20 more than she had budgeted for!

Now she has to remember to add in the London bank’s “sending fee“, which is £17.

Oh, dear! The total now comes to £287. That’s £37, or almost 15 percent, more than her initial offer of £250!

Something’s wrong here. This time XYZ  Translations feel they are out of pocket, while Frank gets off unscathed and receives his payment in full with no deductions at all.

So what went wrong?

1. Frank’s use of Google’s currency converter helped to set up a very misleading expectation of how much he would receive from XYZ Translations. Veronica too, relied on this rate when figuring out how much more she would have to pay for the extra $US 16 Frank requested. The foreign currency rates provided by Google are supplied by Citibank and represent the mid-point between the bank’s buy and sell rates. This rate might be ideal for economists to make comparisons between different countries, but it is not the rate that banks apply to international money transfers. The mark-up on the day’s exchange rate is how banks make their profit when exchanging currencies. The actual buy or sell rates that a bank will charge can vary by up to about 5% above or below the “average” rates quoted on Google or on many other online foreign exchange calculators.

2. Frank and Veronica failed to specify who should take responsibility for paying the costs of making the cross-border payment (or whether such costs could be shared). A critical part of the price negotiation was simply ignored and left to chance.

3. When making transfers to their freelancers, LSPs need to check if the bank’s fee is inclusive or exclusive of the amount being sent.

4. Making comparisons between different payment providers is always very difficult. Figuring out how much any international transfer will ultimately cost is not easy. Many banks and money transfer companies that appear to charge very low fees bury their mark-up in the exchange rate. Others may provide a good exchange rate, but charge sizeable fees.

5. Most banks will charge a fee for not only sending money abroad but also for receiving it. These fees can vary wildly from bank to bank and country to country.

6. Making cross-border payments via the major banks can be a very expensive exercise. But there are many other players in the market place who will do the job for a lot less. The trick is to find a reliable operator who has a low fee structure and has access to exchange rates that are better than those offered by the major banks.

So, who should pay the fees?

Here is the dilemma.

For a freelance translator like Frank, getting $US 60 less than expected on an average-sized job is a small disaster. Given the difficulty of figuring out the cost of international money transfers, it’s not surprising that Frank might prefer to stick with his local customers rather than risk taking on foreign ones.

XYZ Translations, too, is going to think twice before taking on foreign contractors who demand payment in their own currency and who may be unwilling to share the costs of international money transfers. Anyway, figuring out how to pay lots of foreign freelancers every month in many different currencies can be very time consuming – and very messy.

So I went looking for a better solution…

Don DePalma of Common Sense Advisory reports that the global demand for language services continues to grow but that prices continue to fall. He attributes the problem to a number of factors – the ease with which low-cost suppliers can now market their services globally, advances in technology allowing recycled translations to be billed at lower rates, and general economic pressures on the buyers [5]. Luigi Muzii, however, argues that the highly fragmented structure of the industry preserves outdated and inefficient business models [6].

Whether such price compression can be accounted for by external pressures or whether they are due to internal structural weakness, there is no doubt that we must search for new ways to strengthen the industry. To grow and prosper, the translation industry needs – at the very least – to be able to trade globally without the hassle, the uncertainty and the expense imposed by the conventional banking system.

Both LSPs and freelancers are part of the same ecosystem, and struggle with the same economic pressures. Frank and Veronica need to be able to do business with each other in a transparent and mutually beneficial manner.

Our industry needs an international money transfer system that…

  • is transparent, in that it allows both parties to an international transaction to understand the full cost of that transaction in their own respective currencies;
  • allows the parties to factor these costs fairly into their pricing;
  • doesn’t hinder international business dealings through excessive bank charges;
  • is easy to use and can handle multiple transactions in many different currencies on a routine basis. It needs to be cheaper and easier for LSPs to pay their foreign freelancers in their own currencies.

So I went looking for an international payment provider who would agree to set this up – someone who would be prepared to provide inexpensive money transfers and build an online user interface that meets the translation industry’s specific needs.

Someone with a magic wand, perhaps?

… well, I found one.

Next post: What is Translator Pay? Can it really solve our problems? What’s the catch? When will it be available? How will it work? What’s my role in all this?


For a sneak preview, you can visit Translator Pay’s website at www.translatorpay.com where you are welcome to register your interest if you would like to be notified by email when the system is launched.


Notes

[1] The sending fees quoted here were taken from HSBC’s money transfer rates published on-line at http://www.hsbc.co.uk/1/2/international-money-transfer/details as of Friday, 20th July 2012.

[2] The GBP/USD foreign exchange rate advertised by HSBC on http://www.fxcompared.com/ as of Friday, 20th July 2012.

[3] Based on Bank of America fees for receiving international transfers:  http://www.bankofamerica.com/deposits/checksave/index.cfm?template=lc_faq_wire; Citibank https://online.citibank.com/US/JRS/pands/detail.do?ID=WireTransfers as of Friday 20th July 2012.

[4] The GBP/USD foreign exchange rate advertised by HSBC on http://www.fxcompared.com/ as of Friday, 20th July 2012.

[5] Donald A. DePalma (July 2012), Translation Prices – Up, Down, or Unchanged? Common Sense Advisory, Inc http://www.commonsenseadvisory.com/Default.aspx?Contenttype=ArticleDetAD&tabID=63&Aid=2906&moduleId=390

[6] Luigi Muzii, (July 20912), Make yourselves sheep and the wolves will eat you, The Big Wave of Language Technology, http://thebigwave.it/quirks/sheep-and-wolves/

Advertisements
This entry was posted in Getting paid and tagged , , , . Bookmark the permalink.

12 Responses to Paying translators – let’s stop tearing out our hair and just fix the system!

  1. Larissa says:

    I was waiting for this one – but now waiting for the next one!

  2. Martin says:

    The strangest scenario I ever experienced was a job for a local client whom I billed in NZ dollars at the agreed rate, then it turned out that payment was to be sent from the client’s head office in Denmark, which duly arrived less a $22 transfer fee that was entirely at my cost. That one was completely out of left field!

    • Paul says:

      Yes, Martin, that one has to “take the cake”! I like to use the phrase “Let’s make global trading as simple and inexpensive as local business!” LOL, here’s an example of local trading (which is in fact global), but the intellectual worker at the bottom of the heap still pays the price. We’re going to change that! Come hell or high water…

  3. Carolyn Yohn says:

    I’m so glad you are continuing this series on payment practices! I’m very much looking forward to the next post and will check out Translator Pay. Thanks!

  4. William says:

    Use a British translator – problem solved. Much better linguists than Americans anyway.

  5. Pingback: Raising the bar: a translator’s perspective on quality and pricing in the translation industry - GTS Blog

  6. Pingback: Weekly favorites (July 23-29) | Adventures in Freelance Translation

  7. Pingback: Will waving a magic wand be enough to make the pain of international payments disappear? Introducing Translator Pay. | The translation business

  8. Pingback: Paying translators – let’s stop tearing out our hair and just fix the system! | Translation Tools | Scoop.it

  9. Brucher I. says:

    I consider it is up to the end-customer to pay for bank fees. If the end-customer wants to go global and needs language pairs that are not to be found locally, he should pay for the entire price. Why should the translation industry have to benefit from lower bank rates than the rest?… It’s up to translators to mention that “all bank and wire fees are at your own expense” when indicating his payment conditions. Full stop. Or is this another way to demonstrate that intermediaries are a useless, if not counterproductive link in the translation industry?… If these intermediaries cannot explain to their customers that they should pay for those conversion and bank fees, then I would plead for their total disappearance. They have to choose: either they are a nuisance to the translation industry, or they play a constructive role. Agencies should remember at all times they are ONLY intermediaries. Translators DON’T HAVE to use them. Only if they are satisfied of THEIR services. If intermediaries’ service is sloppy (like in this stupid story about bank and conversion fees), translators had better find their own end-customers directly. It takes a bit longer, but it pays twice more in the end. And end-customers are much more faithfull to their translators than intermediaries are. Intermediaries exploit translators until the day THEY make a mistake, then blame it all on the translator and stop the relationship. Always the same thing… I do not know ONE single good agency. To me, sorry, but it’s a business of assholes. Only assholes can start a translation agency and I’ll tell you why: translations are not a service that the end-customer wants to pay too much for, it is not saving his life like a medical or a legal service for example, it’s just a plus. So there is NO ROOM TO FEED intermediaries in the translation business. Full stop. I plead strongly for their total disappearance. 25,000 useless or counterproductive intermediaries in the world in 2011…. There is a lot of work to make them all disappear – and their CAT tools with them… Amen. And let’s go back to translating well, at a normal speed, at a normal rate, finally. Let the professionals act: the translators, and let’s forget about the intermediate assholes once and for all. Geee…

  10. Pingback: Translator Pay: Will waving a magic wand be enough to make the pain of international payments disappear? | Translator Pay

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s