Dealing with the psychological effects of late payments

Guest blog by Robert Rogge

 Before we start: What is a late payment?

A late payment is anything unpaid after 30 days on a NET 30 assignment. Many translators will bill payment on delivery to first-time customers. I recommend alternative strategies that still allow your customer to roll with their ordinary payment system, because many customers pay their bills on certain days of the month. Most people like to keep their routines when it comes to bills, which is cool as long as they don’t pay late.

Psychological effect #1 – Demotivation

Late payments can cause you to become a demotivated translator. What started as a great collaboration becomes awkward. If you continue to receive jobs while your bill is overdue, it becomes difficult to work for that customer. You might start delivering your own projects late, or putting together work of an inferior quality to what you normally expect of yourself.

Even worse, this demotivation can spill over into jobs you do for other customers. It can spill over into the gym or to your daily run. The lack of motivation can permeate your life, and quite a few translators have changed careers because they were fed up with late payments.

Psychological effect #2 – Cashflow problems

Cashflow is something we often deal with intuitively. When you get paid late, you may make subtle but very real changes to your lifestyle in order to avoid a financial downward spiral.

You might lose track of how much money you are earning and how much is outstanding. Your bank account may fall into the red.

So you make a plan to get back on track, but your plans assume you’ll get paid on time. You get paid late again, and all your plans fall apart. Unexpected life events may set you back further. Uncertainty about your next paycheck does not help.

Psychological effect #3 – Bleeding life away

The worst thing about getting paid late is that you start to bleed or leak life, like a leaky pipe. You may start canceling activities or trips. Combined with a lack of motivation at work, this can get you into some dire straits. By canceling activities you enjoy in order to stabilize your financial situation, you may create instability in your personal life.

Counteracting late payments

Ninja tip #1 — The nest egg

The first and most important thing you should do is build a nest egg. Your savings should be roughly equivalent to one year’s living expenses on a tight budget.

One way to build a nest egg is to start putting away a set amount every month. Even if you are still climbing out of the hole, you can start right away. You’ll be surprised how fast the money adds up!

The second thing is to reduce your expenses. Consider moving to a smaller apartment or getting rid of your car payment. Continue to spend on activities – concerts, restaurants, friends, family, etc. – but watch your travel expenses.

Another option is to move somewhere cheaper. I lived in Southeast Asia for one year and watched as my nest egg tripled while I worked and read books at the beach.

Ninja tip #2 — The penalty

Whenever you start working with a new customer, inform them that you will charge them 10% for every week they are late paying you on a NET 30 plan. Put your terms in writing and make sure you include them on the invoice. A contract may not always be necessary.

You might be afraid of losing customers. If you have a nest egg, you’ll be able to bargain from a position of strength. A customer doesn’t agree? Why would you want a customer who is going to pay late anyway? It’s ok to lose a customer if you have enough in the bank to find another, better customer.

Ninja tip #3 — Raise your rates

If you have already trimmed expenses to the minimum and you can’t possibly build your nest egg that way, maybe it’s time to raise your rates.

As with charging a penalty, it’s a lot easier to raise rates when you have a nest egg. But you can do it without one, too. One way is to calculate your risk, evaluating each customer and how much you think you can get, and then carefully raising your rates one customer at a time.

Another way is to spend extra time getting new customers and charging them a higher rate from the beginning. Once you have a new customer at a higher rate, try to get an old customer up to that same rate.

Ninja tip #4 — Empower yourself

Having a nest egg is empowering. Many freelancers never quite get that nest egg, but if you are patient with your spending and persistent with your rates, you may find that saving is your path to earning more.


About the author


Robert Rogge is CEO of Zingword, the new translation marketplace launching this fall. He lives in Croatia, but he has plenty of family ties in Colorado. He misses Santiago’s whenever he thinks of green chili.

At Zingword, translators are guaranteed payment on time for all their jobs. You can sign-up on our jobs page, or follow us on Twitter or Facebook to get the launch notification.