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Clients asking for an annual commission?
Thread poster: Rebecca Reid

Peter Shortall  Identity Verified
United Kingdom
Member
Romanian to English
+ ...
The way things are Mar 11, 2020

Giovanni Guarnieri MITI, MIL wrote:

you have a very good client and you charge them a very good rate... let's say you make £100,000/year out of them.


Would you happen to have the phone number of this very good client, Giovanni?

More broadly speaking, it's easy to criticise people for agreeing to arrangements like this, but discounts of various kinds are something that is very often requested in the business world, so avoiding requests for them is not so easy. The frequency with which I see threads along the lines of "would you stand for this?" attests to that. It's a tug of war over money, and that's the way of the world.


Robin LEPLUMEY
Rebecca Reid
Inge Meinzer
 

Rebecca Reid
United States
Local time: 01:44
French to English
TOPIC STARTER
Responses... Mar 11, 2020

Thanks for all the input. I'll try and answer all points that weren't basically telling me I was naive (don't assume things about people until you know circumstances).
Giovanni's and Peter's posts sum up the situation as far as I was concerned: not 100K/year, more like a third of that, but not something I could afford to just toss away. I'd also had no negative issues with this company in the years I'd been working for them and had (still have) great relations with the staff and even the
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Thanks for all the input. I'll try and answer all points that weren't basically telling me I was naive (don't assume things about people until you know circumstances).
Giovanni's and Peter's posts sum up the situation as far as I was concerned: not 100K/year, more like a third of that, but not something I could afford to just toss away. I'd also had no negative issues with this company in the years I'd been working for them and had (still have) great relations with the staff and even the accounts dept. This woman in admin is nasty and I believe she came up with the scheme. Maybe if I'd known about a forum like this at the time I could have posted for input.

1/ I don't know what areas you work in but in mine (I have 3 areas of "specialization," but marketing research is the biggest) there have been huge changes in the past 10 years that we've had to scramble to adapt to. There have been some rough times. I've gone from pretty much a constant flow of work (except in August) to some fairly harrowing times and a big switch toward clients trying to get me to proofread their own translations, under pressure from higher-ups. They hate doing it, I earn a heck of a lot less, we end up in these big discussions about "I can't make this sound like an English-speaker wrote it in 2 hours" etc. etc. It is not the same market. It's scary. I live in the US now where freelancers walk a tightrope unless they're making big, big bucks. So can I just say, some of these rather disdainful criticisms aren't really helpful unless you've walked in our shoes.
2/ I do not have the funds for a lawyer. Some of you do? Wow. No wonder you can brush off a big client cornering you. I think that's another tightrope we walk as translators. I need more lawyer friends.
3/ Yes, this was an incredibly "clunky" system. If you worked with the French administration at all you will know that clunky can be the norm.
4/ There was no guaranteed volume in the contract. The advantages were supposed to be inevitable increased business due to less competition (didn't happen) and early payment (which is now irrelevant). As I mentioned, they suddenly stopped asking for the payment, there was a gap of several years, and then they started again out of nowhere.
5/ Kay-Viktor: they actually don't call it a commission, that was my word. The word they use is "rémuneration" so I guess there is a sense of "reward," but for what exactly I don't know. I've sent them checks in the past that were made out to the firm so I don't think there's anything shady in that sense, but the scheme as a whole is feeling shadier and shadier on the part of the whole firm.
6/ I totally agree that our "costs" are in our "downtime" - that is exactly right.
7/ Philippe: that sounds like the same kind of principle.
8/ I would be OK with the whole thing if the increase in business covered the % of "remuneration"... So I'm not totally accepting of the notion that this is something never to be accepted. It could potentially be win-win. It depends on your situation I guess.

I appreciate everyone's responses and I hope I answered everything. I don't think anyone on here can offer a "solution," my point in posting was to find out if it's common in the business and to give a heads-up so that if anyone else gets offered this kind of "deal" they've had time to think it through. I've told them my conditions for still working with a contract and I'm going to reach out to my non-admin contacts there to let them know what's going on.





[Edited at 2020-03-11 14:19 GMT]
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Chris S
Teresa Borges
Kevin Fulton
 

RobinB  Identity Verified
United States
Local time: 00:44
German to English
A couple of questions Mar 11, 2020

Hi Rebecca,

You are clearly in a very difficult situation, which is not made easier by the lack of transparency on the part of your client.

Yes, it does happen that clients (mainly non-translation industry clients) expect the sort of rebate you're referring to. Such practices are common in particular in the marketing and media industries, and there's no reason to classify them as unreasonable. However, the client does have to play fair, and if they promised you addition
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Hi Rebecca,

You are clearly in a very difficult situation, which is not made easier by the lack of transparency on the part of your client.

Yes, it does happen that clients (mainly non-translation industry clients) expect the sort of rebate you're referring to. Such practices are common in particular in the marketing and media industries, and there's no reason to classify them as unreasonable. However, the client does have to play fair, and if they promised you additional work and you haven't been getting it, you can walk away from them at any time.

I have a couple of questions:

Do they invoice you for these "commissions"? If not, of course you're under no obligation to pay, because you can't then record the payment as a business expense.

What is the governing law of the agreement you signed?

Robin
PS: It's certainly a good idea to join the ATA, but difficulties with a client are not one of them. ATA does not get involved in disputes between its members and their clients (legally, if it were to do so, it would expose itself to liability issues).
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Rebecca Reid
 

Rebecca Reid
United States
Local time: 01:44
French to English
TOPIC STARTER
Jurisdiction Mar 11, 2020

Hi Robin: this falls under French law since the client is based in Paris. So even if I was to challenge this, I would have to hire a French lawyer from here.
Good point about them not sending an invoice. I guess the presumption is that you just deduct it from your total earnings but I'm not sure how that would be justified in an audit.


 

RobinB  Identity Verified
United States
Local time: 00:44
German to English
A couple of answers Mar 12, 2020

Rebecca Reid wrote:

Hi Robin: this falls under French law since the client is based in Paris. So even if I was to challenge this, I would have to hire a French lawyer from here.
Good point about them not sending an invoice. I guess the presumption is that you just deduct it from your total earnings but I'm not sure how that would be justified in an audit.


Hi Rebecca,

My advice: Don't pay and walk away. They're not going to chase you through the U.S. courts unless they have a substantial U.S. operation and lots of money to spare.

But before you do that, ask them politely for invoices for the "remuneration" they charged you in the past, and explain you can't make any new payments except against an invoice (and then walk away, see above...). You can tell them your CPA is demanding this because it's an IRS requirement.

This is also a tax accounting issue. If you apply a discount to an invoice you issue, then only the amount you receive is taxable. But if they pay you an amount of, let's say, €100, that amount will be taxable, but if you subsequently refund €5 to the client, it's basically coming out of your own pocket because you can't claim it as a taxable expense with a corresponding invoice.

Live and learn, I guess.

Robin


Robin LEPLUMEY
Sheila Wilson
Rebecca Reid
 

Samuel Murray  Identity Verified
Netherlands
Local time: 07:44
Member (2006)
English to Afrikaans
+ ...
White lies Mar 12, 2020

RobinB wrote:
You can tell them your CPA is demanding this because it's an IRS requirement.


I would not recommending telling anyone that "your CPA" is demanding it unless your CPA is demanding it. What's the use of combating dishonesty with dishonesty? I suppose some would say that this sort of statement ("my tax advisor demands it") is just a white lie, but even white lies can get you into difficulty.


Thomas T. Frost
MollyRose
 

DZiW (X)
Ukraine
English to Russian
+ ...
Reasoned opinion: It’s a lie, because _________ Mar 12, 2020

Samuel, depending on the exact wording and technicality, it’s not a lie, but projections: they want 2-3% of future income (providing no stable job flow or paying higher rates), whereas in near future some CPA consultant or auditor—or legal adviser—can ask about it, causing unnecessary trouble. It's rather playing safe)

That’s why I would recommend consulting a CPA/specialist--or renegotiating the terms


 

Giovanni Guarnieri MITI, MIL  Identity Verified
United Kingdom
Local time: 06:44
Member (2004)
English to Italian
My example... Mar 12, 2020

was to highlight that not all the cases are the same. In theory, I agree that the OP should walk away, but the cost of walking away must be taken into account... but this is obvious. It's business and in an ideal world we would like fair business terms and good human relationships. Unfortunately, sometimes, this is not possible. Waiting for the a fair, approachable, understanding, pleasant client might have health risks... you might be dead by the time you find one... ... See more
was to highlight that not all the cases are the same. In theory, I agree that the OP should walk away, but the cost of walking away must be taken into account... but this is obvious. It's business and in an ideal world we would like fair business terms and good human relationships. Unfortunately, sometimes, this is not possible. Waiting for the a fair, approachable, understanding, pleasant client might have health risks... you might be dead by the time you find one... Collapse


Rebecca Reid
 

Sheila Wilson  Identity Verified
Spain
Local time: 06:44
Member (2007)
English
+ ...
Time to start casting the net wide Mar 12, 2020

Giovanni Guarnieri MITI, MIL wrote:
Let's say you have a very good client and you charge them a very good rate... let's say you make £100,000/year out of them. Let's say one day they decide they want 2% of the money you make from the work they give you, would you turn down the offer and lose the client?

I'm sure few of us would be able to simply say "no, go away". But it would be a massive call to attention, surely? I'd be wanting to re-evaluate the relationship from my end too.

- For a start, you'd need to go through the contractual terms with a fine-tooth comb. You could need the services of a lawyer with international expertise to determine whether it could bite you down the line.

- Then you'd want to make sure you weren't paying tax on income that you simply return to the client. And you'd need to make sure you could never be accused of money laundering, paying for arms or whatever. You could need the services of an accountant with international expertise to determine that.

- I personally would want to reduce that client's importance to my business from that day on. If they'd always been willing to pay that "very good rate", there are bound to be others out there. Finding new clients who will accept -- in a simple, straightforward way -- anything from that very good rate to 2% lower would be a winning result. Personally, I'd be happy to replace them with clients who paid even a little bit less than that as clients who call for special interventions from lawyers and/or accountants are high maintenance ones. Peace of mind is worth paying for, and relying too heavily on one client -- however high the rate -- is never a good idea anyway. So I'd start spending more time marketing, with a view to gradually losing all dependence on their business.


 

Giovanni Guarnieri MITI, MIL  Identity Verified
United Kingdom
Local time: 06:44
Member (2004)
English to Italian
Not sure why... Mar 12, 2020

Sheila Wilson wrote:



- I personally would want to reduce that client's importance to my business from that day on. If they'd always been willing to pay that "very good rate", there are bound to be others out there. Finding new clients who will accept -- in a simple, straightforward way -- anything from that very good rate to 2% lower would be a winning result. Personally, I'd be happy to replace them with clients who paid even a little bit less than that as clients who call for special interventions from lawyers and/or accountants are high maintenance ones. Peace of mind is worth paying for, and relying too heavily on one client -- however high the rate -- is never a good idea anyway. So I'd start spending more time marketing, with a view to gradually losing all dependence on their business.


Sheila, the 2% I'm giving to my (made-up) client wouldn't even pay for the time I would waste with lawyers (and their enormous fees), finding new clients with an attractive rate (I can assure you they are not easy to find), marketing... In Rebecca's shoes, I would keep the client and pay the €500...

[Edited at 2020-03-12 17:16 GMT]


 

Sheila Wilson  Identity Verified
Spain
Local time: 06:44
Member (2007)
English
+ ...
You're assuming the situation is fully understood Mar 12, 2020

Giovanni Guarnieri MITI, MIL wrote:
Sheila, the 2% I'm giving to my (made-up) client wouldn't even pay for the time I would waste with lawyers (and their enormous fees), finding new clients with an attractive rate (I can assure you they are not easy to find), marketing... In Rebecca's shoes, I would keep the client and pay the €500...

Although we don't have all the details, quite a few of us are worried that this arrangement may not be entirely legal. If it isn't, goodness knows where it could lead. If it is legal, it's likely that the OP hasn't fully understood the deal. That's a situation that shouldn't be allowed to continue.

I agree that accepting a 2% discount on everything you do for a client -- aka accepting a reduced rate -- is always an option that a freelancer might be willing to consider.


Giovanni Guarnieri MITI, MIL
 
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