Training for Translators

Classes for translators and interpreters

Money


Corinne McKay

A recession may be coming: how can you prepare?

Watch your back for a recession

I’m not an economist (far from it!), but it’s hard to miss the rumblings in the financial press that the US (or even the world) economy may be headed for a recession. After a 10-year bull market, we’re in a bit of a “what goes up must come down” situation, and as a business owner, the best time to start planning for a downturn is last year, but if you haven’t done that, let’s start planning now!

This topic has been marinating in my mind for a while, and it came to the forefront when I listened to a recent episode of The Freelancers Show podcast, on recession-proofing your business. Side note: I both understand and dislike the term “-proofing” (future-proofing, recession-proofing), because you can’t really “-proof” against something as uncertain as the future, or a recession. And I think it can create a false sense of security to say “my business is now recession-proof,” when in reality that’s not possible. However, I understand why people use that term, so let’s go with it.

A helpful episode of The Freelancers Show

The Freelancers Show–hosted by a rotating panel of IT guys–is one of my favorite non-translation business podcasts. The hosts and topics are generally really interesting, I think it’s good to get perspectives from another industry, and I find a lot of their advice appealing because it’s for nerds. It’s straightforward, non-salesy stuff for people who work in nerdy industries. The host of this recession-proofing episode, Reuven Lerner (he’s a Python programming trainer), is one of my favorite panelists, and his strategies are often surprisingly applicable to translators, because he works with a lot of international clients.

Step one: build up your savings

So, if a recession is in fact coming, what can you, as a freelancer and a business owner, do to prepare? I recommend that you listen to Reuven’s podcast episode, and I’ll elaborate on a few of its suggestions here, with a few of my own.

–If business is good for you right now, start building a cash cushion. If the recession comes, you have a financial buffer. If it doesn’t, you still have a financial buffer and you can re-invest it in your business, or decide that life is short and it’s time to go to Hawaii for a month. Either way, a better cash cushion in your business is a healthy thing to have.

–How much is “enough” in savings? That’s a tough one because it depends on the specifics of your situation. By how much could you cut your living expenses in a pinch? How much debt do you have? Who else relies on your income?  Ideally, I think a year of living expenses in the bank is a good cushion. In reality, you have to balance the many moving parts of your financial situation.

With the caveat that I’m not a financial advisor, here’s an example. I aim for about a $10,000 cushion in my business savings account; much less than a year of living expenses. However, I feel that for my situation, it’s sufficient. We paid off our mortgage a number of years ago and are now completely debt-free, and our house has approximately doubled in value since we bought it in 2004–that opens up the option of taking a pretty large home equity loan if we needed cash. We have a decent amount of long-term savings in retirement accounts, but because of our big push to go debt-free (which my husband and I both agree was worth doing), we probably have less liquid cash than many two-income families do. However, we have a lot of financial flexibility if we need it: we have one kid who will go to college next year (all the money for that is in a 529 account) and thus will no longer live with us full-time. If we did some improvements to our house, we could rent it for probably $2,500 a month. I already have a job where I can work from anywhere. My husband has an in-house job, but he works in IT so theoretically could find a remote job. And let’s say that we a) needed to cut our living expenses and b) wanted to go on an adventure, we could do something out-of-the-box like move to Thailand for a year, where one can rent a quite nice one-bedroom apartment for, let’s say, $1,000 a month, while simultaneously renting our own house out for a lot more than that. Realistically, we both love traveling, and we could probably find a place in a really inexpensive country where we could even live without working if we rented our house out. That opens up a lot of options.

On the flip side, if you have a big mortgage, car loans, credit card debt, student debt, a spouse who stays home full time, your elderly mom in the garage apartment, and three kids in elementary school, you’ve got a very different situation. That’s a pretty big ship to re-route if the economy goes sour. In that case, you might aim for more like 75-100K in savings. Everyone’s mileage varies, but hopefully those examples help.

Step two: consider your current clients

In the podcast episode, Reuven makes the point that recessions don’t hit every business sector equally, or perhaps even at all. For example, the dot-com bubble really only affected tech companies. At the time of the 2008 recession, I was doing a lot of legal translation. Business volume during that time: never better! Some sectors of the translation industry make money “coming and going” so to speak, and are probably relatively immune to a recession.

But you want to look at your current client base and identify clients where you might be classified as “the fat” if that client had to “trim the fat.” Reuven uses the example of teaching in-person training courses: he anticipates that if there’s a recession, his smaller clients may stop hiring in-person trainers all together (so he’s developed more robust online offerings), or they may bring trainers in for shorter courses. In our profession, I’d be looking at clients who are hiring a translator because they want to, not because they have to. If you’re translating a client’s blog because they think it’s fun to have it in multiple languages, that might be an expense they’d look to cut if they needed to. If you translate for architecture or construction companies, they could be some of the first to be hit by an economic downturn.

So first, take a realistic look at, let’s say, the clients that provide the top 50% of your income, and ask yourself whether they’re likely to cut back on translation in a financial pinch.

Step three: consider what thrives in a recession

Even in a serious recession, there’s still business to be found. Reuven gives a great example of this: in a tight job market, many people are looking to build up their professional skills so that they’re as marketable as possible for the smaller number of jobs that are available. Recessions are a great time to expand into teaching and training, or to offer services like copywriting and web design that help freelancers market themselves.

Recessions are also a great time to beef up your own career skills. When you don’t have a ton of work, you have another advantage: time. If you have that robust savings cushion and can afford to take a hit on your paying work, a recession can be a great time to go back to school, pursue a new specialization, re-train for an aspect of the language professions you’ve always been interested in, whether that’s software localization or conference interpreting.

Step four: Start casting a wider net

When you have a thriving business, it’s easy to get complacent. But when a recession hits, you’re stuck kicking your (nonexistent) marketing engine into gear. Better to start revving it up now, so that the groundwork is in place when/if you need new clients. Examples of this would include:

    • Starting to attend client-side conferences to get to know the players in your target business sectors. Perhaps you can even start replacing some of your lower-paying clients right now. Read a blog post about how one of my online course participants did exactly that.
    • Expanding the circle of translators and interpreters who know you, which is not only fun, but increases the possibility that they will think of you when they’re giving referrals or looking for someone to partner with. I’m doing that in my own business: for a long time I’ve turned down basically every non-ATA speaking invitation I received, and I’m now starting to accept some of those since I have more time. This appeals to me personally, and is also a good way to spread the word about my online courses and books to new people.
    • If there’s a job search portal for your target business sectors, join it. For example I belong to Devex, which focuses on the international development sector. I’m not looking for an in-house job, but I like to keep an eye on which entities are hiring, which indicates that they’re on solid financial footing.
    • The run-up to a potential recession is also a good time to think about diversifying. If you’re interested in running a multi-pronged business–which not everyone is–now may be a good time to launch another arm of your business.

Finally: take a look at your fixed expenses

A sudden business downturn can hit very hard. For example, I expect to make almost exactly $100,000 from translation this year (which makes it easy to calculate percentages…) and I earned $18,000 from one client and $17,000 from another, both of which are entities that could theoretically take their translations in-house if they assigned them to a bilingual staff person, which I know for sure that they have. Of course that’s not a great option–they’re happy with my work and their bilingual staff have other jobs and aren’t professional translators, but it’s still possible. And that’s 35% of my income for this year.

To keep that kind of hit from becoming a catastrophe, it’s good to a) build a savings cushion (see above) and b) carefully review any fixed expenses you have in your business. Reuven gives the example of having salaried employees who he had to lay off during the 2008 recession. If you have employees, especially if you live in a country where you’re legally obligated to pay them severance if you lay them off (one month per year of service is not uncommon in some places), that’s something to consider. If you rent an office (which I do), that’s also something to consider. For example, I would probably not take out a year-long lease on a desk space right now; I’d go for month-to-month if at all possible, and if not then something like six months. If needed, I could–perhaps at the cost of my mental health!–give up my desk space and go back to working from home.

Readers, other thoughts on this? How concerned are you about the possibility of a recession? What are you doing to prepare?

If you enjoyed this post, you might be interested in the January-February 2020 session of my online course Marketing to Direct Clients; including recorded slide presentations, live question and answer sessions, and individual feedback on your plan to target direct clients.


Corinne McKay

Should you allow clients to pay by credit card?

I often say that the worst reason to turn down a translation job is because you can’t figure out how to take the client’s money. However clients want to pay you, you want to make it happen. In 16 years of freelancing, I think I’ve probably been paid in nearly every imaginable way, including cash (from an official document client who came to my office and paid in person).

An alternative to paper checks

Like many translators, I’m trying to migrate my clients away from paper checks and toward electronic payments. This is more complicated than it might sound, because the US banking system has been very slow to adapt to electronic payments in a way that is a) free, and b) easy to set up. ACH (“direct deposit”) transfers are usually free, but the client has to set you up in their online banking system, which can be time-consuming. Emerging methods such as Chase QuickPay are simpler, but people seem slow to adopt them, and the fee structure is not always transparent. Additionally and even more frustratingly, these proprietary electronic payment systems often have oddities that you would not anticipate–for example that you are limited to transfers of a certain amount if the recipient uses a different bank than you do, or that you have to call on the phone and verbally approve transfers over a certain amount, to someone you’ve never paid before (I’ve experienced both of those with Chase QuickPay). Hence, checks still rule the American banking and payment system.

PayPal: better or worse?

I’ve long maintained that PayPal is not the worst way to take payments from individuals. I use it with all of my individual clients (probably at least 100 transactions per year), and for all of my online course registrations. All told, I processed nearly $50,000 through my PayPal account last year, with a correspondingly large fee taken out: about $1,500, since PayPal charges a commission of about 3.5% on each transaction (more for international credit cards, less if the person uses their own PayPal balance to fund the transfer, and so on: see reference above to “non-transparent fee structures”).

I’ve also observed that, for whatever reason–paging a behavioral economist here–people tend to pay electronic invoices much faster than they pay an invoice that they’re going to write a check for. Something about that tantalizing link or “pay now” button just gets the payment juices flowing.

First, try direct deposit

Before you go the credit card route, try this: ask all of your regular clients if they’d be willing to set you up in their direct deposit system. Surely they are not still mailing paper paychecks to their own employees, so if they’re paying you with any regularity, try that first.

Next, look at PayPal.me

In 2018, PayPal introduced a novel service called PayPal.me. That’s not an affiliate link, and here’s a post about PayPal.me from the money transfer service Transferwise which covers most of the bases. PayPal.me allows you to create a one-click link that’s pre-set to the amount the client owes. If you want to see how it works, here’s a link I’d send out to someone who owes me $100. Click-pay-done; the client enters no information besides their own credit card details, and you’re set.

The primary reason not to accept credit cards is the fee, but there are a lot of upsides:

  • Instant gratification: if you sell on-demand products or services, people can purchase them right there
  • No more dealing with paper checks and their various hassles
  • The ability to pressure late-paying clients (“Let’s just take care of it right now; could you put it on a card?”)
  • The ability to enforce cancellation deadlines by charging the client in advance. If you provide services that require a certain amount of notice to cancel (i.e. language teaching, conference interpreting, online training), this could be really helpful. Rather than trying to enforce your cancellation policy, just charge the client’s credit card at the time of the cancellation deadline.
  • It’s incredibly easy for the client. Click here. That’s it. I find that my law firm clients (who are perpetually short on time) are particularly receptive to this.

Here’s what I’ve been experimenting with

  • I still send a PDF invoice for every translation, so that the client has that if they want it. The invoice contains instructions for paying by check or wire transfer.
  • In my e-mail to the client, I also say, “If you’d like a one-click payment option, here’s a link that’s pre-set to the correct amount.”
  • A surprising number of clients take this option, meaning that I pay a commission, but get my money right away, sometimes the same day I issue the invoice.

At this point in my freelance business, I’m ready to chalk this up to “the cost of doing business.” At the outset of my business, when a 3.5% hit on a large payment would have made more of a dent in my finances, I probably wouldn’t have done that. One thing I would not recommend is explicitly telling the client that they have to pay the credit card fee: it’s really not their problem, and I think it looks kind of penny-pinching. Most of my direct clients want me to make translation easy and painless for them, and while they’re looking for value for money, they’re not necessarily focused on “cheap.” So if I raise my rate a tiny bit to cover this fee (usually embedded in a per-project price), it’s OK. When I worked primarily with agencies, that would not have been true.

Readers, do you have thoughts on what payment methods you’re currently accepting?


Corinne McKay

Billing by the word, by the hour, or by the project…what to do?

If you want to inspire fierce emotions in a group of translators, ask this question: is it better to bill by the word, by the hour, or by the project, and is the per-word pricing model on its way out?

Per-word pricing has historically been the norm in our profession. Per-word pricing has a few advantages:
-As long as the source document is countable, everyone knows up front exactly how much the translation will cost
-Faster translators earn more per hour, which encourages specialization, efficiency, and appropriate use of technology (and, perhaps, excessive speed, but that’s a different issue)
-The quoting process is very simple. How many words? OK, here’s your price. Done.

This model also has disadvantages:
-It positions translators as “piece workers,” rather than consultant-level professional service providers
-It opens the door to nickel-and-diming. I once had a potential client ask if I charged “for the little words.” (Only if you want them translated!). Translators who bill by the line or character may be subject to even more minutiae, such as whether the character count includes spaces
-It can lead to haggling over seemingly-tiny amounts of money that add up over time. If you translate 500,000 words a year–not atypical for a full-timer–a one-cent difference adds up to $5,000 over the course of the year

Per-hour pricing is more the norm in many other professional service jobs. My accountant, attorney, and web designer all charge by the hour. The issue is this: for whatever reason, many translation clients are resistant to paying an hourly rate that is the equivalent of the per-word rates they’re already paying. This is true of many of my agency clients: I earn, say, $75 “an hour” when translating for them by the word, but they offer, say, $40 an hour for editing–meaning that I only work for them when paid by the word.

At the risk of over-analyzing, this phenomenon has a domino effect. Because editing (for agency clients) is typically paid per hour, at a rate that is lower, and sometimes much lower, than the “hourly rate” that translators earn when paid by the word, many experienced translators avoid editing. Meaning that newer, less experienced translators are often brought on board as editors, which may or may not be a good idea.

Hourly billing also removes some of the incentives associated with per-word billing: there’s actually a disincentive to increase your speed by specializing, if that means that you do the same amount of work in less time.

My favorite way to bill is by the project. I do this with many direct clients. I feel that:
-It gives the client one number to focus on. How much is this going to cost? While…
-I can tweak the per-word rate a bit, to reflect the deadline, file format, research time, etc. without haggling with the client about this

Readers, any thoughts on this? Have you moved away from per-word pricing and toward something else? I ran this post in my newsletter and got some interesting answers, so I’m interested to hear what you have to say.


Corinne McKay

Five ways to minimize the risk of not getting paid

Failing to get paid for a translation you provided to a client is always a risk; I think it’s unlikely that anyone goes through an entire freelance career without at least a couple of non-payment situations.

In 16+ years of freelancing, I’ve been stiffed twice: once by an individual who dropped off the face of the earth after I delivered the translation–after which I started requiring individuals to pay in advance–and once by an agency that went out of business between when I delivered the translation and when the invoice was due (no, really). In one case, the non-payment situation showed me that I needed to change my own procedures. In the other case, there was really nothing I could have done differently. Following are five tips on how to minimize the risk of being stiffed by a client:

  • Vet all agencies in advance. This one is so basic, yet many translators skip this step. If you work with agencies, ever, at all, in any fashion, get yourself a membership to a translation agency rating service. I use Payment Practices, and the ProZ Blue Board is also an option. In my experience, the Blue Board tends to have more current feedback, and more feedback on agencies outside the US, but the feedback on Payment Practices is often more candid. I find it both heartbreaking and frustrating when I (not infrequently) get e-mails from translators saying, “I did a huge job for this agency and they never paid me!” And in–literally–30 seconds of searching on Payment Practices, I can tell that this agency never pays anyone. They’re scammers, and the translator could have easily avoided this mess, but either a) didn’t know that such rating services exist, b) was too lazy to check, or c) didn’t feel that they needed to invest $20 a year in not getting scammed.
  • Require individuals to pay in advance. Some translators hate working with individual clients. I happen to love it, but I also realize that individuals need to be treated differently from established businesses. In the non-payment situation I referenced above, the individual simply evaporated: didn’t pay me, didn’t answer my phone calls or e-mails and refused to sign for a certified letter. My only options were to try to go see them in person, or take it to small claims court (then try to collect?), or drop it, which I did. Now, I do not do an individual’s translation until they pay, even for large projects. Risk of non-payment=zero.
  • When in doubt, ask for a deposit. You know those e-mails we all get: “You don’t know me, but I have this great project for you”? Lots of translators spend lots of time trying to figure out if they’re scams–which they are, most of the time, but not all of the time. There’s an easy solution: reply, and inform this potential client that for all new clients, you require a 50% deposit, to be paid by credit card or wire transfer (not by check). If you never hear from them, it was a scam. If it’s legitimate, most clients will understand that–especially for largish projects–a 50% deposit is reasonable.
  • Stay on top of habitually late-paying clients. Many freelancers have clients who always pay…eventually. Whether due to a cumbersome accounting system, a lack of cash flow, or some other factor, these clients will exceed their stated payment terms by weeks and even months. In these cases, I think you have two options. With clients who just don’t get around to paying on time, increase your level of reminders. Upon sending the invoice, remind them, “Just for reference, this invoice is due on May 9 and I look forward to receiving your payment on or before that date.” Then, one week before the payment is due, remind again. “In looking over my accounting, I see that invoice number X for Y amount is due next week; can you confirm that everything is on track for that?” Hopefully, they’ll get the point. Sometimes, it is really just a series of unfortunate events. Last year, I had a client who owed me 3,000 euros for over three months: I was out of town in July, then they closed for the month of August, then the accountant went on maternity leave, etc. etc. But if it’s a pattern, they need to know it’s not acceptable.With clients that seem to be having cash flow problems, where you either suspect or know for sure that they are waiting until they get paid before they pay you, proceed with caution: limit your exposure to not more than you can afford to lose if they go bankrupt. Also remember that you always have the option to stop working with a client whose business dealings you find disrespectful.
  • Finally, don’t blame yourself if you’ve done everything right and still don’t get paid. This happens, especially if a client “plays dead” and simply never responds to you, or to a collection agency, or anything else (see above, about the client who refused a certified letter, claiming “There’s no one here by that name”). I haven’t experienced this with a non-payer, but I have experienced it with an agency whose outsourced writers plagiarized my blog posts, admitted to it, and then did it again. In the end, I had no choice except to take them to court, which is time-consuming, expensive, and a waste of emotional energy that I’d rather put into something positive. Sometimes, mean-spirited people will get the better of honest people, and you have to just let it go and chalk it up to the cost of doing business. So that’s a bonus tip: just as stores get shoplifted, you as a freelancer will probably get scammed at least once in your career due to no fault of your own.

Readers, over to you: your thoughts on making sure you get paid?


Corinne McKay

How to set a budget for your freelance business

This post originally appeared in my newsletter, and a couple of readers asked me to post it here so that they could refer other translators to it. Here you go!

Setting a budget for your freelance business is important, because:

-Many freelancers have no idea how much they need to earn in order to achieve the same level of financial security as someone with a traditional job.
-As a freelancer, you probably need to earn more than you think in order to reach your financial goals.
-You need to know how many billable hours per week you need in order to reach your target income.
-If your rates right now are too low, you need to at least acknowledge that and make a plan to do better in the future (rather than working, working, and working, and then wondering why your bank account empties so fast).

In my online courses, I use a worksheet called “deciding what to charge.” John Milan and I also used this worksheet in our session at the 2018 ATA conference (which got very positive reviews, so hopefully we’ll present it again!). Here, I’ll give you a simplified version of how to do the calculations on that sheet.

Start with: the amount of money you want in your bank account every month, to pay your non-business living expenses such as rent or mortgage, utilities, food, entertainment, and so on. That’s your desired/required net monthly salary.

Next: to that, add every expense that you incur for your business. If the expense is not paid monthly (i.e. professional association dues), divide it into a monthly amount and enter that. Your expenses may include some or all of the following, plus anything else that you pay that is not listed here:

-Taxes: (20-50%, depending on your tax bracket and your country)
-Retirement account contribution
-Paid vacation/sick time allocation (money that you put into a business savings account so that you can pay yourself when you take time off)
-Professional association dues
-Professional development (conferences, webinars, classes, individual coaching, etc.)
-Subscription-based web services (cloud backups, PDF conversion service, LinkedIn Premium, etc.)
-Office rent
-Computer hardware and software (new purchases and/or upgrades)
-Work-related child care (if applicable; and don’t forget in that in the US, you may be able to deduct summer day camp for kids under 13)
-Work-related travel
-Communications (internet, cell phone, Skype minutes, etc.)

Add it all up, and that’s your required or desired monthly gross income. Warning: as discussed above, this will be a big number. Perhaps bigger than you want to admit; but the first step is to get a grand total. If you’re feeling energetic, do this for three income levels: the minimum you can live off, the amount that gives you the similar level of financial security to someone with a traditional job, and something in between.

Next (not done yet!), multiply that number/those numbers by 12, to get your required or desired yearly gross income. Write that down.

Now we’ll convert that to your required hourly rate.

Take 52 weeks, and subtract the number of weeks you think you will not work (vacation, sick time, time off to take care of family members, etc). Divide your yearly gross income as calculated above, by your number of working weeks. That gives you your required income per week. For example if your required/desired gross income is $90,000 and you’re going to work 48 weeks per year, your required income per week is $1,875 per week.

Next, determine how many hours per week you realistically think you can/want to bill. Non-billable time is a big variable. For beginners, non-billable time often involves time that you would like to be working, but you don’t have paying work. For experienced translators, it’s more likely to involve non-billable but necessary tasks such as accounting, marketing, professional development, research, client communications, etc. As a side note, when other freelancers ask me, “How do you find the time to work on marketing or other non-translation tasks?” my answer is “By not having to bill 40 hours a week.”

I’d advise doing this calculation for perhaps 25, 30, and 35 billable hours per week: take your required weekly income (your equivalent of the $1,875 listed above), and divide that by your number of billable hours, to determine your required hourly rate. For example at 25 billable hours per week, our $90,000 translator would need to earn $75 per billable hour to generate $1,875 in a week.

The fun continues because most translators aren’t paid by the hour. If you are, great: you’re done, other than asking whether your existing clients will pay your required hourly rate. If you get paid by the word or the project, then you need to further calculate how fast (or slowly) you translate. For example to generate $75 an hour, you could translate 500 words at 15 cents, or 250 words at 30 cents, or 800 words at 9.3 cents (these are not recommended rates or translation speeds, just examples). Translation speed is a huge factor in your income, and one that a lot of translators overlook: if you are someone who translates 250 words an hour, you need to charge a lot more than someone who translates 600 words an hour.

At the end of all this, you should at least have a better sense of whether the numbers for your freelance business add up the way you want them to; and if you’re not making enough money, why you’re not.

  • Perhaps you have tons of work, but it’s pervasively low-paying.
  • Perhaps your rates are fine, but you need more work.
  • Perhaps you translate very slowly.
  • Either way, these calculations should help you base your pricing decisions on objective data, rather than on fear and vague speculation about “what the market will bear.”

In closing, a huge thank you to Jonathan Hine, who presented the pricing presentation at the ATA conference for many years before passing the baton to me and John, and whose booklet “I Am Worth It!” goes into greater depth on the calculation methods I’ve mentioned here!