Money

Nov 03 2022
Corinne McKay

Making your peace with “the big number”

Some of you may have already signed up for the Innovation in Translation Summit, (not an affiliate link) organized by Josh Goldsmith, Nora Diaz, and Jost Zetzsche. It’s happening online November 15-17 and the basic ticket is free; paid options give you access to replays, slides, live panels, etc.

My presentation topic for the Summit is “How much money do you really need to make as a freelancer?” The whole presentation is only 20 minutes, but I thought I’d give you the basics here, and then if you attend the Summit, you can see the whole thing along with tons of other great stuff. To cut to the chase:

Lots of freelancers are in deep denial about how much you need to earn as a freelancer, in order to achieve the same financial security as someone with a traditional job. I know this, because I see under the hoods of lots of freelancers’ businesses. Many people feel that they’re earning an OK income. Oftentimes, this is something in the range of US $45-$60K, which various compensation surveys identify as the mean income in the language professions. However, the situation gets less rosy when I ask people whether they:
-Are able to achieve their personal financial goals (buy a house, have a savings cushion, save for their kids’ education)
-Have enough money in a business savings account to pay themselves when they take time off, to avoid burning out
-Always have enough money in savings to pay their taxes
-Are able to fund professional development, computer hardware/software upgrades, and professional services like an accountant
-Are dependent on a partner’s or spouse’s income when they’d rather not be dependent on that

When it comes down to it, I think that a sustainable freelance income is closer to double the mean average: more like $90-$120K if you want to be doing the things listed above. If you need to increase, or even radically increase your freelance income, step one is to calculate and make peace with that big number. Getting there is possible, with excellent translation and interpreting skills and a good marketing plan, but first you have to know where you’re doing. A couple of options:
-If you want something basic, and if you, like me, feel a tension headache coming on every time you have to think about numbers, use my super-basic Deciding what to charge worksheet
-If you have a higher tolerance for numbers and want more detailed statistics, try the US CalPro spreadsheet available for free on the ATA website

Corinne McKay (classes@trainingfortranslators.com) is the founder of Training for Translators, and has been a full-time freelancer since 2002. An ATA-certified French to English translator and Colorado court-certified interpreter, she also holds a Master of Conference Interpreting from Glendon College. For more tips and insights, join the Training for Translators mailing list!

Mar 14 2022
Corinne McKay

Rates: do they fit your financial goals

Tip for today: the number one question to ask yourself when you’re thinking about whether or not to accept a given rate is, Does this rate meet my financial goals? I get a lot of questions from freelancers, asking things such as:
-“Is X cents a word too little to charge?”
-“Should I offer volume discounts to clients with large projects?”
-“What should I do if a client tells me I have to decrease my rates by 10%?”

The factual answer to all of these is, I don’t know, because the real question is, does this rate meet your financial goals? Step one is to get clear on your financial goals, in as precise a way as possible. For example I can tell you that my financial goal is to earn about $90 an hour, billing about 25 hours a week, 48 weeks a year, which gives me a gross income of US $108K. That doesn’t mean working 25 hours a week, it means billing 25 hours a week; things like marketing, accounting, professional development, giving quotes, writing this newsletter, are all non-billable time, on top of the time I’m getting paid to work for clients. Knowing this information makes it a lot easier to say no to projects that don’t fit my financial goals.

If you have no idea what those numbers (required hourly rate, number of billable hours per week, etc.) are in your business, here’s a simple worksheet that you can use as a starting point. That link will allow you to download the worksheet. It’s not comprehensive, but it will help you start answering this question about rates that fit your financial goals.

Oct 11 2021
Corinne McKay

The joys and sorrows of electronic payments

The state of electronic payments in the US

If you live in a country with an actual modern banking system (not the US!), this article will be utterly useless to you, and your country is to be congratulated on that fact! If you live in the US and are a freelancer who likes to take electronic payments, here’s some information about the current state of electronic payments in my business.

Much to the chagrin of…basically anyone in the US who accepts electronic payments…, the US has yet to adopt the IBAN system. The vast majority of US bank accounts still use the routing number, account number, and (for international transactions) SWIFT code system.

It’s a sad reality that checks remain a common payment option in the US. Why? My sense is that although checks are slow and insecure (hence the expression, “the check’s in the mail”), they are also fee-free, as compared to many electronic payment options in the US. Back in 2019, I tried to nudge most clients toward electronic payments. At that time, I made a key decision: any client can pay by credit card and I will absorb the commission. I do this because I strongly prefer electronic payments, and because I find that many clients will pay an electronic invoice almost immediately, versus taking some time to mail a check.

I also use electronic payments to pay my online course instructors, so I see this issue from the payer and the payee side, which is interesting.

Electronic payments I accept

I have my business bank accounts at Chase. For clients in the US, my preferred method is Zelle (essentially the same system as Chase Quick Pay). Zelle is free to Chase account holders (no fee to send or receive) and is pretty easy to use, especially once someone is set up as a payment contact in your Zelle settings. A downside of Zelle is that you can only link it to one set of accounts. I have business and personal accounts with Chase, so this can be annoying if I want to do some personal transactions and some business transactions through Zelle. However, overall, I like Zelle.

For clients outside the US, I’ve become a big fan of Wise (not an affiliate deal). Their fees are quite reasonable, even for relatively large amounts. I recently paid US $24 to send $4,000 to one of my online course instructors, which was less than the $30 my bank wanted to charge, and essentially half of one percent of the transaction. Wise also allows you to enter the exact amount you want the recipient to receive, so there are no surprises once you’ve transferred the money. One wish I have for Wise: I wish they’d set up a one-click payment system like PayPal’s PayPal.Me service (more on that below), where you can just send someone a link with a pre-set amount. So far Wise doesn’t have this feature. Two weird things I’ve encountered with Wise (I’m adding this to the original post after getting some questions from readers):

Two of my direct clients have told me that they can’t use Wise, because it’s “not a bank.” Why that matters, I don’t know. Whether that’s true, I don’t know…but two clients have told me that their institutional rules prohibit them from using Wise for that reason.
When I receive an international transfer via Wise into my US bank account, for whatever reason, it is processed as an ACH payment which is free to me, rather than as an international wire which costs me $15. Again, file under “I don’t know,” but in order for the international Wise transfer to be free to me, the client has to send it via their Wise account, which some clients don’t want to set up.

Some of my French university clients have an already established payment system that must go bank to bank; they cannot use Wise, because it’s an intermediary, not a bank. For that, I use Chase’s incoming foreign wire transfer system, and I was able to negotiate Chase down to $15 per transfer.

Lately, I’ve also started using Venmo to accept payments from individuals and to pay my online course instructors. At the outset, Venmo struck me as a bit fly-by-night, but they now require (or at least strongly recommend) that you enter the last four digits of the phone number of the person you’re sending to. This strikes me as an excellent step, because one major downside of peer-to-peer payment apps in the US is that they generally do not have the ability to rescind a payment, as explained in this NPR Planet Money episode about a reporter who accidentally sent her apartment security deposit to the wrong person. I’m pretty happy with Venmo and there is no commission for peer-to-peer transactions, but make sure to use the phone number verification feature, especially for large amounts.

The big elephant in my payment room is PayPal. If you want to accept credit cards, you’re going to get hit with pretty big commissions of at least 2.5%. You can look at services like Square or Stripe, but the commissions do not differ significantly. I like PayPal because people in the US know it and are receptive to it, and it has a lot of features. You can create invoices, Buy Now buttons, etc. and you can use their PayPal.Me service to create a one-click link that’s preset to a certain amount. I find that in particular my law firm clients, who have zero time for anything, almost always use this option when I offer it. The issue is that all of PayPal’s fees are percentage-based, not flat, so if you take a lot of payments over PayPal, the amount really adds up. Almost everyone who takes my online courses pays by credit card, so I paid several thousand dollars in PayPal commissions last year, but I honestly don’t see a way around it. I’ve stopped using PayPal to pay my online course instructors due to their high commissions and the availability of other options like Zelle and Venmo.

Finally, it’s always worth asking any client if they can just pay you by direct deposit, also called ACH. Undoubtedly they pay their own employees by ACH, and I have a couple of clients who I work for every month who have set this up for me.

Readers, any other thoughts on electronic payment options?

Nov 23 2020
Corinne McKay

Are pandemic discounts a good idea?

The pandemic is doing odd things to people’s freelance businesses: something I’ve discussed in a pandemic roundtable podcast, and a blog post. About all that can be said is that some things are up and others are down. I’ve heard from multiple freelancers (translators and interpreters) who’ve never been busier, and from others who are considering a career change because their businesses have crashed. It really just depends on who you work for and how your clients, or your clients’ clients, have been affected by the pandemic.

In my case, what was true in June — direct client work stable, agency work slim to nonexistent, court interpreting work slim to nonexistent, online courses selling out as fast as I can get them posted — held true until this month, when I landed a large new agency client. More on that below.

Let’s talk about discounts in general

By far one of the biggest questions on freelancers’ minds seems to be: should I offer a pandemic discount? Former students have told me that their clients are pressuring them for pandemic discounts; others whose work volume is way down wonder if discounts might help it rebound. Let’s take a look:

Most importantly, never give a discount unless there’s a business case for you to do so. Make sure you can complete the sentence, “I am offering this discount because…” It always irks me when freelancers say, “The client made me lower my rates (do extra work without extra pay/agree to be paid by the word for editing/etc. etc.).” No, sorry, the client didn’t make you do that, because you’re not even their employee, much less their indentured servant. The client asked for that, and you said yes, or at least did not say no. So first, make sure that you are intentionally offering a discount for a specific reason.
Second, remember that there can be economic reasons for not offering discounts, and there can be non-economic reasons for offering discounts. Here’s what I mean: if your work volume is low, consider whether you’d in fact be better off raising your rates and looking for higher-paying clients, rather than offering discounts to your current clients. In my case, I offered a new agency client a discount for a non-economic reason: because, for a while, I’ve had a goal of landing a new high-volume agency client, especially since one of my main direct clients (a grant-funded NGO) is winding down their work on the project I translate for. My income this year will be almost exactly what it was last year, which I’ll put in the “win” column considering the pandemic and that I’m in grad school. I didn’t have an economic reason to offer this client a discount. But for various reasons, I’ve been interested in landing a new agency client with large international development projects, so I jumped at the chance to do that, and I offered them a rate that “split the difference” between their ideal rate and mine. In the end, I think both parties were happy.
Third, remember that if you look for lower-paying work, you’re likely to find it. And then…you’re stuck doing that work, putting in longer hours for less money, perhaps resenting it, and so on. There are valid reasons to give discounts, but before you take a self-inflicted pay cut, make sure you’re clear about your reasons.

Is the pandemic itself a reason to give a discount?

Honestly, this depends very much on the sectors in which you work. If clients are approaching you, claiming that their own business has been affected by the pandemic and thus they want lower rates from you, that might or might not be true. If they’re in the hotel industry, or commercial real estate, or aviation, then they are probably correct (which still doesn’t mean that you have to offer a discount; it just means that the client’s revenue is probably down by quite a bit). If they’re in the medical supply or online education sectors, then it’s a different story. Yes, lots of businesses have gone, or will go bankrupt because of the pandemic. But it’s simply not true that all businesses are suffering: if you bought Zoom stock a year ago today, you would have paid around $50; today, over $400. Not every industry has been affected equally.

And again, the client’s financial situation is not your problem. Your financial situation is very much your problem. But it’s worth considering whether your clients’ businesses have actually been affected.

What’s your mental state right now?

This is a non-economic factor worth mentioning. The other day, a former student told me that she offered her biggest client a pandemic discount, because she’s homeschooling two kids, feels constantly stressed out, and needs a steady flow of work that she can do without too much extra stress. Her take: now is not the time for a demanding new client, even if they pay well. Fair enough. I’m on board with that line of reasoning.

Could some sectors have a delayed reaction to the pandemic?

This is something I think about a lot. For example, my international development work is relatively unaffected at the moment, and I’ve even landed a new client. But I wonder if, because NGOs tend to operate on long funding cycles — sometimes three years or more — there could be a bit of a boomerang effect next year or even later than that. I really don’t know.

Is it better to just look for new clients?

This is always the question: when are you better off sticking with a long-term client who is easy to work with and sends you lots of work (but asks for a discount), versus looking for new, higher-paying clients. Of course there is not a yes/no answer to this, but I’d consider factors such as:

Is this client’s request based on their specific situation, or do you work in a sector that’s been hard-hit by the pandemic in general?
What is your financial cushion like right now? Again, there’s a huge range: if your spouse has been unemployed for six months with no end in sight, now may be a time to stick with the bird in the hand. If you’ve been earning the same as before the pandemic but spending less because there’s nowhere to go and nothing to do (this is the case at my house!), perhaps it’s a good time to make the leap.
How much time and energy do you have for marketing? Realistically, it’s a very tough time to be a freelancer if you have young kids doing online school from home. That’s a valid consideration right now.
What new clients would you market to, and what’s your pitch? Here again, you want to think in a sector-specific way. With the recent news about highly-effective vaccine trials, it seems like there’s at least a shred of a chance that we might see the other side of the pandemic in mid to late 2021 (is that wishy-washy enough…I’m trying not to make predictions here!). So it might be worth doing some “get ready for the rebound” marketing to industries that have been hard-hit. Or those industries may be reeling so badly that you don’t want to rub salt in the wound. That’s something that you need to research and think about on an individual basis.

Readers, over to you: your thoughts on pandemic discounts?

Feb 17 2020
Corinne McKay

What’s the best way to have clients pay you?

Here’s a question from a reader: What’s the best way to have clients in my own country or in other countries pay me? I’m in the US, and checks seem slow but electronic payments seem expensive? How can I handle this?

What’s the best way to receive money from clients, especially if you live in the US?

Well…the tricky part here is “especially if you live in the US.” The best way to receive money from clients is to live in a country that has an actual modern banking system (sorry for that snarky dig, US banking system) and has converted to low-fee or no-fee electronic payments. But if you live in a country that hasn’t done that–like let’s say, the US, where, by various estimates, up to 50% of business payments are still made by paper check, and up to 50% of businesses don’t use electronic payments at all–then you have to be strategic about how you receive payments.

Here, I want to give a shoutout to my friend and colleague Eve Lindemuth Bodeux, who has presented and written extensively about international payments, including on this episode of Speaking of Translation, and in this ATA Chronicle article. Eve’s experience with payment methods is much more comprehensive than mine, so I’ll focus here on how I handle payments from various types of clients.

So here’s my short answer to this question: the best way to receive money from clients (especially if you live in the US), is via the method that is the most convenient, the least onerous, and the least expensive for the client, as long as that method is not completely unacceptable or financially nonsensical for you. Here’s what I mean: the vast majority of the time, I offer clients a variety of payment methods and let them choose the one that works best for them. In a very few cases (i.e. a client who wants to pay by bank wire transfer for a minimum charge job, or a client who wants to pay by paper check in a currency other than US dollars) I will outright say no, but that’s pretty rare. Let’s dig in a little further.

Why (on earth) do paper checks persist?

This is purely a rant and not at all constructive, but let’s pause for a moment and ask: why does the US cling so tenaciously to paper checks? When, in many other countries, people don’t even know how to write checks anymore? What’s going on here? I’m not a banker, but I’d theorize that:

Checks are free. In the US, we have yet to see widespread use of an electronic payment system that’s free. There are possibilities, but they all have issues. For example there’s Zelle, but if you have multiple sets of accounts at one bank (which I do), you have to (as far as I can tell) link Zelle to either your personal account or your business account, because your Zelle ID is an e-mail address, not your account number.
And on and on it goes: PayPal and Venmo transactions to “friends and family” are sometimes free, but not covered by purchase protection.
Checks have a few other “advantages” (I put that in quotes, because really, who likes checks? Basically no one…), largely related to the fact that the US has been so slow to adopt electronic payments. People are familiar with them and understand how they work; many people in the US who I talk to are still terrified that if they give someone their bank account details–for example, for an electronic payment–that person can somehow steal all the money out of their account. The death of checks will be a beautiful moment, but it’s not coming soon enough.

Live with fees and hassle, or try to find a better way?

Especially if you live in the US, I think your first payment method question is a conceptual one: am I willing to put up with bank fees and bank hassles, in the name of “the cost of doing business,” or am I not? That may sound kind of weird, but here’s what I mean: I paid $3,154 in banking fees in 2019. Oh, yes. even my accountant almost fell off her chair when I read her the number. However, $2,683 of that was PayPal fees on my online course and book sales, and I don’t really see a way to sell those things without taking credit cards. Some people (thank you!) will e-mail me and offer to pay for their online course registration via TransferWise, but otherwise it’s PayPal and a commission of approximately 3.5% on every transaction. So there’s the “expense” part of the equation.

On the flip side, I have numerous clients who still pay by paper check. It’s a hassle. I have to wait for the check to arrive. Then I have to not toss the check into the recycling bin with all the rest of the mail which is spam. Then I have to deposit the check using my bank’s app on my phone (as an alternative to taking it to the ATM), keep the signed check until it clears, then shred it, etc. etc. So there’s the “hassle” part of the equation.

But here’s the point: I have personally decided to chalk all of this up to “whatever,” or–phrased more professionally–“the cost of doing business.” With each invoice, I give the client at least three ways to pay:

Mail a check
Pay electronically, by bank transfer
Pay electronically by credit card, using PayPal.me

And whatever the client’s preferred option is, that’s what they do, unless there are some really extenuating circumstances. For example if a new client outside the US wants me to do a minimum charge job, I’ll ask ahead of time how they pay, because I don’t want to pay $15 (the flat-rate international wire transfer fee at Chase, where I have my business accounts) to receive something like $75. But otherwise, I just present the client with the options, and they pick.

But couldn’t you ask/tell the client…

Sure. Sure, I could ask/tell the client that I accept only electronic payments, or that wire transfers must be made by TransferWise–in my experience, it’s the cheapest international wire transfer option, and it’s often even free, as if the payment were coming as a US direct deposit–or that if the client wants to pay by credit card, they have to pay the processing fee. All of those things are possible. However, one of my values in my business is to be as painless and low-stress as possible to deal with. I want clients to finish a project with me and think, “That was so much less stressful than we thought!” And part of that is saying, “Here’s how I accept payments. Take your pick.” If the client already has an established wire transfer method set up, I’m not going to force them to create an account with TransferWise to save me $15. In the same way that I might ask someone, “Would you like to talk on the phone, Skype, or Zoom?” and I don’t really question why they prefer Zoom over Skype, I just put my payment options out to the client and let them have at it.

It’s also completely fine (and a lot cheaper than what I’m doing!) to be less permissive with your clients when it comes to payments. I know several translators who are part-time or full-time digital nomads, who absolutely refuse to take paper checks. If a client’s only way to pay is by paper check, they have to find someone else. I know a couple of other translators who will only accept wire transfers through TransferWise. All of those options are completely fine, as long as you’ve deliberately decided that this is what’s best for your business.

“Because it costs money” is not a great decision-making tool

My preferred ways to get paid are–roughly in descending order of preference:

TransferWise (free, fast, easy)
PayPal for small amounts (fee is a percentage so it’s a small amount, fast, easy)
Paper check (free, slow, painful)
Bank wire transfer for large amounts ($15 but at least it’s a flat rate, fast, easy)
PayPal for large amounts (fee is a percentage so it can be a big hit, fast, easy)
Bank wire transfer for small amounts (pay $15 to receive $75?, fast, easy)

Regardless of your preference, I think there are way too many translators objecting to various payment methods not because they’re objectively really expensive, but because they cost money at all. PayPal for large amounts is really expensive; it’s worth avoiding it if you can. But refusing to see any fee at all as the cost of doing business is, in my opinion, short-sighted.

Readers, over to you? Thoughts on what payment methods you’re using these days and what you think of them?