| Pages in topic: < [1 2 3 4] > | Why and how do agencies fail? Thread poster: Dan Lucas
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Dan Lucas 
United Kingdom
Local time: 16:17
Member (2014)
Japanese to English
TOPIC STARTER | Positive for the agency? | Jan 29, 2016 |
LegalTransform wrote:
many online crowdsourcing portals. Client pays .18, portal charges .12, agency earns .06 with no need to do any recruiting, testing, finding translators for jobs, billing or tax documentation for 800 different translators...
In that case I guess this is positive for the agency? I mean, if what you describe is accurate it sounds like a cushy number. Maybe we'll see more firms moving into this and fewer in traditional agency business.
Regards
Dan
| | | | | Hard to know | Jan 29, 2016 |
We, translators, do not operate translation agencies. We are only a small (yet important, I think) part of the "value chain".
Obviously, it's a speculation, but I presume that as they go bigger (in terms of turnover and employees), new skills are necessary rather than juts common sense.
| | | | Kay Denney
France
Local time: 17:17
French to English
The agency I used to work for went under officially for cash-flow reasons.
The reason was actually that the couple running the show split up. The smarter, more energetic of the two (the one who had training as a translator) left to start another business. The other doubled his salary and bought a new Merc as a company vehicle. According to the sharks who bought what was left at the end, the company had been in perfectly good shape, it just couldn't afford to finance his escort girl... See more The agency I used to work for went under officially for cash-flow reasons.
The reason was actually that the couple running the show split up. The smarter, more energetic of the two (the one who had training as a translator) left to start another business. The other doubled his salary and bought a new Merc as a company vehicle. According to the sharks who bought what was left at the end, the company had been in perfectly good shape, it just couldn't afford to finance his escort girls as well as the translators. ▲ Collapse
| | | | Dan Lucas
United Kingdom
Local time: 16:17
Member (2014)
Japanese to English
TOPIC STARTER | A broad church | Jan 29, 2016 |
Texte Style wrote:
According to the sharks who bought what was left at the end, the company had been in perfectly good shape, it just couldn't afford to finance his escort girls as well as the translators.
So, ah, lust and greed. Truly all human life is to be found in the agency business...
Dan
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| My contribution, as requested. | Jan 30, 2016 |
Tom in London wrote:
Michael Wetzel wrote:
I think José has a similar policy in place, because of the currency situation in Brazil. Maybe he has something to contribute.
Well yes. I think 5% would be over-generous. But you've planted the seed of a thought in my mind.
My domestic translation price (in BRL) has remained unchanged since July 1994 to this date. How is that possible?
Quite simple: I passed on all the productivity gains I got from IT developments.
In 1994 I had to drive across town to fetch floppy disks or hard copy from the client. Having finished my act, I had to drive all the way back to deliver my translations on floppy disks or laser-printed on paper. My #1 client then moved to about 10 miles out of town. A nice ride in the countryside, however it took considerable time.
I think it was in 1999 when I upgraded to a Pentium I - 233 MHz.
I had no clients overseas before the Internet.
No point in going into further detail here, nor to compare with how it's done today. Y'all know it. Most of all, my web site brings me most of the new clients. It's up there doing its job 24/7, so I don't have to invest time in seeking new clients. The Internet enables me to promote my services to, and serve the entire planet without leaving home.
The story is much longer, however the gist of it is that on account of USDxBRL exchange rate changes, in Jan. 2010 I increased my "international" rate in USD by 20%. In mid-2012 I had reasons to lower my USD rate back to what it was, but I didn't.
Instead, in 2012, I chose to keep translation costs and financial costs apart. That's what I tell every prospect. The pure translation cost I charge is my old, pre-20% increase rate, and any client paying me net COD will get that price.
The way to state my rates, I mean to phrase them, is the other way around. Due to PayPal's policy forbidding surcharges by the payee for the use of their system, my standard rate is stated as for payment via PayPal within two weeks from delivery.
This includes:
PayPal fees 6.5% + PayPal's openly admitted 3.5% lower-than-market exchange rate for USD to BRL
Brazilian interest rates, current MPR (yes, monthly!) for overdraft being 12.76% (Itau Bank) per month.
I think two weeks is enough "operational time" for the agency to check what I've delivered, and deliver it to the end-client, then for the latter to check it, pay the agency forthwith upon approval, and the agency paying me. No more time is needed, but 'they' should cover the interest on payment IF they want to take their time to check. I offer full guarantee: I'll fix any reasonable flaw detected immediately, and at no charge.
Then, if the client can avoid incurring these purely financial costs, viz. by paying via any other method (wire, Moneygram, Western Union) and/or paying faster, they are entitled to a generous discount from me, however at the expense of PayPal and/or greedy banks in Brazil (assuming I'd get that money pronto via overdraft).
This sheds some light for the present thread: Why and how do agencies fail?
Some figures on overdraft in the USA may be found here. It is much more complex and chaotic than in Brazil because its high popularity seems to be relatively new.
AFAIK overdraft in Brazil began in the mid-1970s at Banco Real (nothing ado with our present currency name, which came up only in 1994), later bought over by Santander.
The key question is: Why should a translator adopt overdraft interest rates?
My answers would be:
a) Because a professional translator is consequently expected to be an amateur in money lending; and
b) Because I have never seen nor heard of a bank anywhere on this planet that offers translation services.
The translator who actually performs the translating act (without outsourcing it to colleagues or MT) is the beginning of the supply chain. There is no way to keep an inventory of "marketable translations" for immediate delivery from the shelf. Of course, professional translation requires some considerable investment in education, training, reference materials, computers and supplies, utilities including Internet access, marketing, etc.
Therefore any translator who accepts payment at any time later than in the very moment their work is delivered is actually granting a loan to their client. That loan is unsecured (i.e. the translator may not repossess the translation, in case of default in payment), the due date is not tied to any easily enforceable penalty, so that if the translator needs that money immediately to pay, say, some bills that will enable them to continue translating, the most viable solution will be an overdraft.
A translation agency faces the same situation, however with a few differences including, though not limited to:
As a firm, they MAY choose to offer "money lending" services, i.e. different prices to the end-client for different payment terms. I haven't seen yet a translation agency doing this anywhere. Of course, they'd have to invest in infrastructure to check every customer's credit beforehand, which I haven't seen any agency doing either (otherwise we wouldn't see so often agencies telling translators, We'll pay you as soon as our defaulting client pays us!) Most of all, this requires some venture capital, which too many agencies don't have, or are not willing to allocate as such.
Agencies have no safety net for quality issues. Quite often they don't know squat about the source, the target, or both languages, and their translator choice (especially if their markup is high) might be unlucky. If the end-client gets wise and rejects a sloppy job, they may have to pay through the nose to get it redone properly.
Agencies are "needy" on both ends: they need to keep customers happy, so they have jobs to do; they must also keep translators happy, so they have who can do the work "available" for them. This is a possibly weak position, so they must impose their power upon translators. The way to do it is by abusing the overabundance of amateurs and part-timers and forcing low rates, which may lead to the situation in the previous bullet. It's a delicate balancing act.
These three are sufficiently powerful to turn a translation agency belly-up, if not properly managed, without mentioning many others.
A whole new array of issues magically comes up when international borders are crossed.
"Tom in London" says that a 5% discount would be over-generous.
"Joe in Sao Paulo, Brazil" (= yours truly) says otherwise:
Let's take a job where my standard price would be USD 1,000.00 for payment via PayPal in two weeks. I'll charge USD 833.33 for it to any client willing to pay COD (2 business days) via bank transfer or P2P service.
The problem is that I can't translate IT into EN-UK like Tom does. I'm guessing that, if it were the case, Tom would charge USD 1,200.00 to do this same job, because he lives in England.
All right, let's give my uncompromising professional ethics a few days off. I studied Italian for 4 years in High School, still speak it rather fluently, could wing it like I see some country fellows of mine translating from English. And I translate into EN-US all right.
An agency could hire me instead of Tom to do this IT-EN job, and pay me USD 833.33. If the end-client is not a fesso, it will be rejected. So they'll hire Tom to redo it comme il faut for USD 1,200.00.
Total agency expenditure: USD 2,033.00. Was any profit whatsoever left? Quite unlikely. They'll be lucky if they manage to cover all expenses in this gig without pulling some cash out of their pocket.
This can also make an agency crash.
Bottom line is that translation agenting requires extremely competent business management to work. Too many people in this trade think that it's just a matter of buying cheap translation services and selling them with a hefty markup.
| | | | | I like that ... to an extend | Jan 30, 2016 |
LegalTransform wrote:
(especially among newer agencies) in which all work is just outsourced through one of the many online crowdsourcing portals. Client pays .18, portal charges .12, agency earns .06 with no need to do any recruiting, testing, finding translators for jobs, billing or tax documentation for 800 different translators...
[Edited at 2016-01-29 14:26 GMT]
I recently did a test for an agency who then turned out to be some kind of portal that sends out several offers daily, you look at the job, deadline, requirements, send in an offer and get an e-mail back when the job is assigned. I have only done two small jobs with them so far, but they offer fortnightly or monthly automated payment, and there is a PM at hand when needed.
The fact that mostly several translators bid for a job is not so nice, but as long as I get my rates I don't mind. So far it seems an efficient system that saves e-mailing back and forth ... I hope this system works for them.
[Edited at 2016-01-30 12:04 GMT]
| | | | Jeff Whittaker
United States
Local time: 11:17
Spanish to English
+ ...
| The "Uber"ization of translators | Jan 30, 2016 |
The problem with this new crowdsourcing model is that if customers move away from the agency-based model (for financial concerns or for convenience), how does one stand out as a professional translator with years of experience when you are reduced to a mere number in a database on equal footing with someone with no experience?
Gabriele Demuth wrote:
The fact that mostly several translators bid for a job is not so nice, but as long as I get my rates I don't mind. So far it seems an efficient system that saves e-mailing back and forth ... I hope this system works for them.
[Edited at 2016-01-30 12:04 GMT]
[Edited at 2016-01-30 12:32 GMT]
| | | | Jeff Whittaker
United States
Local time: 11:17
Spanish to English
+ ...
| I agree with this | Jan 30, 2016 |
and I think that many agencies are missing out on an opportunity to work with some great translators.
For example, suppose I complete a $3,000 project for an agency and the client is very happy. If this agency has a 45-day or 60-day payment date, that means that I cannot do another project for this agency for another 45 to 60 days until I get paid or else I risk building up too high of an outstanding debt.
José Henrique Lamensdorf wrote:
Therefore any translator who accepts payment at any time later than in the very moment their work is delivered is actually granting a loan to their client. That loan is unsecured (i.e. the translator may not repossess the translation, in case of default in payment), the due date is not tied to any easily enforceable penalty, so that if the translator needs that money immediately to pay, say, some bills that will enable them to continue translating, the most viable solution will be an overdraft.
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Jeff Whittaker
United States
Local time: 11:17
Spanish to English
+ ...
| I fear that many agencies may find themselves in an unpleasant situation... | Jan 30, 2016 |
... when some translators attempt to get themselves reclassified as employees. I remember this happened in 1993-95 when some translators sued to get retroactive employee benefits (social security taxes, etc.) and agencies started requiring that you have business cards, a dedicated phone line and your own rate guidelines and terms and conditions in order to prove that you were not an employee. This is back when the "freelance" model was still new.
Now, many years later, some have for... See more ... when some translators attempt to get themselves reclassified as employees. I remember this happened in 1993-95 when some translators sued to get retroactive employee benefits (social security taxes, etc.) and agencies started requiring that you have business cards, a dedicated phone line and your own rate guidelines and terms and conditions in order to prove that you were not an employee. This is back when the "freelance" model was still new.
Now, many years later, some have forgotten that there are rules and regulations governing when someone is independent and when someone is an employee. Just because you work at home and don't punch a time clock, does not mean that you are not an employee.
Some agencies are dictating rates, dictating payment terms and deadlines, dictating which tools must be used, mandating where and when a translator can work, tracking time worked on a project by asking translators to log-in, requiring the use of their own tools..., all indicators that move toward an employment relationship rather than an independent contractor relationship. For example, there is a big lawsuit scheduled to take place in June to get Uber drivers classified as employees because Uber sets the rate and other work conditions.
[Edited at 2016-01-30 13:04 GMT] ▲ Collapse
| | | | Tom in London
United Kingdom
Local time: 16:17
Member (2008)
Italian to English
| More than one client | Jan 30, 2016 |
LegalTransform wrote:
..... Just because you work at home and don't punch a time clock, does not mean that you are not an employee
If over a period you only work for one client, then the tax authorities, if they check your accounts or your client's accounts, may consider that you are, de facto, employed by that client. Therefore that client would be liable to pay all of your social security and pension contributions etc.
Needless to say, translation agencies and translators alike should avoid getting into that situation.
So as a translator you should always work for a range of different clients.
You should never allow any one client to tell you how to organise your business. It's *your* business, not theirs.
[Edited at 2016-01-30 19:36 GMT]
| | | | mag013
Local time: 03:17
Italian to English
+ ...
| You mean like this 'freelance' job here | Jan 31, 2016 |
'We are looking for a number of proofreaders who will be able to commit to 10 pages/day of light proofreading...We are looking for candidates who are willing to commit to 30-40 hours/week, as this is a large contract set to last for the next several years. '
http://www.proz.com/translation-jobs/1110662
[quote]LegalTransform wrote:
... Just because you work at home and don't punch a time clock, does not mean that you are not an employee.
| | | | Andy Watkinson
Spain
Local time: 17:17
Member
Catalan to English
+ ...
| The "Biggie" (no, not the rap "artist") | Jan 31, 2016 |
Loads of great answers here which cover most if not all the reasons you've asked for Dan, but I'd just like to add one that I've seen so many times it can't be a coincidence.
Yes, there's mismanagement, general incompetence, lack of resources, skills, etc... but most of the small operations I've seen fail have one thing in common, which is that they were started by individual translators who one day simply got lucky and achieved (perhaps undeservedly) what they'd always dreamt of: t... See more Loads of great answers here which cover most if not all the reasons you've asked for Dan, but I'd just like to add one that I've seen so many times it can't be a coincidence.
Yes, there's mismanagement, general incompetence, lack of resources, skills, etc... but most of the small operations I've seen fail have one thing in common, which is that they were started by individual translators who one day simply got lucky and achieved (perhaps undeservedly) what they'd always dreamt of: they acquired a big client - a real "biggie".
Result: they can't even handle all of this client's work, let alone that of all the other clients they already had....so it becomes a case of "Why don't I outsource it all and I can sit back and watch as the money rolls in", which in turn swiftly and dangerously morphs into "Why don't I open an agency"?
And yes, things work out OK for as long as they have the "biggie", the one which is actually paying the bills and producing the profit but, as we all know, these key clients eventually disappear.
And that's when we ask why the agency failed.
[Edited at 2016-01-31 02:56 GMT] ▲ Collapse
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Agencies who's payment terms are 60 days + are in my view risky. If their clients are again agencies, these may have a normal 30 day term and the second agency relies on them to pay before they can pay translators ... and the first agencies may fail as well.
I have one such client (a new client) and will offer them 2% discount if they pay within 14 days - I am not sure whether they will agree to that?
Also, if a client pays an agency a higher rate then I assume they do ... See more Agencies who's payment terms are 60 days + are in my view risky. If their clients are again agencies, these may have a normal 30 day term and the second agency relies on them to pay before they can pay translators ... and the first agencies may fail as well.
I have one such client (a new client) and will offer them 2% discount if they pay within 14 days - I am not sure whether they will agree to that?
Also, if a client pays an agency a higher rate then I assume they do that for a reason and expect some extra value, e.g. project management, quality control etc. If an agency has nothing extra to offer but just passing documents around and issuing invoices then this might not be enough? ▲ Collapse
| | | | Dan Lucas
United Kingdom
Local time: 16:17
Member (2014)
Japanese to English
TOPIC STARTER | Worst possible combination | Jan 31, 2016 |
mag013 wrote:
'We are looking for a number of proofreaders who will be able to commit to 10 pages/day of light proofreading...We are looking for candidates who are willing to commit to 30-40 hours/week, as this is a large contract set to last for the next several years.'
I'd hope that most freelancers would be smart enough to understand what they are being offered in that job posting are the disadvantages of both regular employment and freelancing, with the perks of neither.
Regards
Dan
| | | | | Freelance Business vs. Employment | Jan 31, 2016 |
Dan Lucas wrote:
mag013 wrote:
'We are looking for a number of proofreaders who will be able to commit to 10 pages/day of light proofreading...We are looking for candidates who are willing to commit to 30-40 hours/week, as this is a large contract set to last for the next several years.'
I'd hope that most freelancers would be smart enough to understand what they are being offered in that job posting are the disadvantages of both regular employment and freelancing, with the perks of neither.
Regards
Dan
I assume the above is MT post-editing and the company tries to find cheapest way of getting this done, without any additional costs.
Freelancers run a business, have overheads, spent their time on other things like marketing, admin ... employees are usually provided with computers offices etc and get paid for every hour they work. That's why freelancers should charge accordingly to cover those expenses, it seems many don't and this is where such companies will find cheap "employees" whom they give work when they have it, who makes no other demands ... and when they drop the translators they are in trouble because they have no other clients left.
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