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When it comes to accepting payments from overseas, I’ve learned the hard way that there is no single answer as to what works best. It all depends on a range of factors, such as:
- the country in which you live
- the country or countries in which you hold bank accounts
- the facilities available to you either through your bank(s) or in the country in which you live
- the country in which your clients are based
- the currencies in which you will (hopefully) be paid
- the amount and frequency of payments
- applicable fees, exchange rates and transfer times
I was reminded of this when listening to Episode 5 of the podcast Speaking of Translation. Presenters Corinne McKay and Eve Bodeux cover many interesting points on receiving payments, particularly for freelancers working across borders.
In my case, I have clients from all over Europe as well as here in Australia. I’ll quote and accept payments in one of three currencies – euro, sterling or Australian dollar – with payments made into one of my respective bank accounts in either Ireland, the UK or Australia. (I also need a good tax accountant to help keep things straight!) These are nothing fancy – just regular current (US: checking!) accounts, with full internet and telephone banking facilities and the lowest general account fees I could find.
My “deposit mix” changes all the time. However, in the interest of giving you some background, at the moment the largest percentage of my income comes from a couple of regular payments in sterling, followed by occasional healthy payments in euro and finally, many relatively smaller sums in Australian dollars.
As for playing the exchange-rate game, I’m pretty careful when it comes to quoting. I also have the luxury of a little leeway when it comes to transferring money between accounts. I’m sure I could be much smarter about it if I really tried, but ultimately cash flow is king. Some days I win and some days I lose, but I like to think it all evens out in the end.
In terms of payment methods, sterling and euro payments are all made by direct bank transfers (this seems to be called ACH in the US), which has never been an issue for my clients as it is quick, easy and free. Dollar payments tend to be a mix of cheque and direct bank transfers. Surprisingly I don’t get asked to accept PayPal payments so often anymore, possibly due to my shift towards more Australian-based individual as opposed to business clients.
However here’s what I had to say about PayPal almost 2 years ago, when Michelle Goodman asked me for my thoughts on payment methods, among other things, when she interviewed me while researching her book My So-Called Freelance Life. It echoes Corinne and Eve’s discussion, so I thought it would be worth digging up and posting here:
… PayPal is certainly a convenient way to have clients pay you (and some clients even specifically ask if can they pay this way), but you pay handsomely for the honour. The initial payment fees are high, the fees to then transfer it into your bank account are high – and when it comes to changing between currencies, it gets even more expensive. Worst of all, it’s not very transparent, so until you actually see the final balance in your account, it’s very hard to figure out just how much of your income you’re about to lose in fees (it depends among other things on what kind of card your client uses to pay you, for example…)
Personally, I don’t think it’s worth it, except as a once-off, last resort measure. Of course, if clients are happy to pay me a slightly higher rate to cover these fees, then I’m happy to receive payment that way. But funnily enough they rarely are, and if I included these fees in my rate upfront then I wouldn’t appear competitive, so I’d lose out there too. All in all, PayPal has far too many cons for me.
I tend to use a complicated mix of several bank accounts in different currencies, and keeping an eye on exchange rates to change money over when things are in my favour. It can negatively affect my cash flow and creates bookkeeping headaches at times, but I see it as part of the cost of overseas clients and at the end of the day, it’s more than worth it financially.
Ultimately, if you’re going to deal with overseas clients, then it’s absolutely essential that you work out the hidden costs behind getting paid before you take them on…
If clients were to request online payments in the future, I’d certainly look into some of the other options out there. For now though I’m happy with my current set-up, arrived at after much trial and error. I’m sure there must be as many variations on this as their are translators though, feel free to share yours in the comments.
Finally, I’d highly recommend subscribing to Speaking of Translation, if you haven’t already. (Eve and Corinne are looking for suggestions of themes for future episodes too, so head over to their blog and leave a comment to let them know what you’d like to hear covered). Details on how to subscribe here, or to subscribe from within iTunes, go to ADVANCED, SUBSCRIBE TO PODCAST and then enter the audio feed’s URL: smcpodcasting.libsyn.com/rss.
Image: The Big Money by DavidDMuir on Flickr
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Thank you for the post!
As for on-line payment, I can recommend MoneyBookers – it is very fast, cheap and you can withdraw the money and send it to any of your accounts.
For anyone who has bank accounts in multiple countries (UK and Canada in my case) and needs to move money between them, I recommend XE Trade (http://www.xe.com/fx/). I’ve been using it for 2.5 years. There are no fees involved if you use the EFT/ACH/BACS option to send and deposit funds, and the exchange rate is better than the banks’.
Hello,
Great article, as a beginning free-lancer it’s exactly the kind of info I’m interested in! I have a question though: I see that you get paid mainly through bank transfers; how do you communicate your banking information to your new clients? Do you send a hard copy of it, fax it, send an encrypted email? It’s always delicate to disclose that kind of information and I’d be afraid it might end up in the wrong hands…
Thank you for your response!
@ sarahdillon
December 8, 2009 at 8:27 pm
@Gina First of all, and most importantly, I simply wouldn’t agree to work with anyone I was suspicious of, let alone send them my bank details. I usually have quite a lot of personal data on prospective clients before I send them anything. This is part of my usual due diligence process and is probably the most important step in keeping my personal data safe. As a bonus, it also cuts down on wasted admin time. Now I’d love to give you more details, but given you’ve left a temporary email address and no other information about yourself, I think it would be pretty foolish of me…
For the record, and for anyone else wondering about this, I think it’s worth pointing out that in theory it is safe and even necessary at times to share your bank account and branch details – although as always, a measure of reasonable caution is required. You can not legally withdraw money from an account with only these details, as they are so easy to obtain from a range of sources (even direct debits require an official direct debit mandate before they are effected). For example, they are clearly printed on the front of every cheque, and how many of us issue cheques without a moment’s thought of who will have a visual on them after we’ve handed them over?
Of course in practice it is possible to use these details to fraudulently withdraw/ steal money, but I believe for most people, there are other more obvious and far more likely sources of security breaches.
Hmmm, I’m thinking a post on online security might be in order… stay tuned!
Sarah,
Even if you are quite cautious and know a lot about your client, the risk of non-payment is still there. For multiple reasons.
.-= DM´s last blog ..На сайте появился блог. =-.
Sarah,
Thanks a lot for your response.
I wasn’t thinking so much about the risk of disclosing any information to the actual client – after all, we want to be paid! -, but more wondering how a translator could communicate their sensitive information securely in a fast-paced environment – when that translation is due for yesterday! Of course the email comes to my mind as it is so simple/quick, + I’m a beginner = I’m cheap, and email is free! ^^ So I guess my question was merely: do you think sending an email is okay??
But I would understand if you do not want to answer this further… Sorry about the temporary email, I am just trying to be cautious myself with all of my information! ;p
Anyway, great post! You’re in my RSS reader!
Thanks for the interesting post. You may be interested in knowing that we have included Speaking of Translation on our free Qabiria toolbar for translators and project managers (see http://tinyurl.com/qabiria-toolbar). The podcast is located in the Radio section.
I recommend MoneyGram: fast and not that expensive.
I just came accross your blog and found this post very interesting. What is the reason for you to have three bank accounts? Is it because you don’t want to lose money with the currency exchange when getting paid or is it because some clients aren’t willing to pay into foreign bank accounts?
Thanks!
@ sarahdillon
April 1, 2010 at 10:42 am
@Cat, it’s because I’ve found that I lose too much money when I work with only one bank account for several reasons, e.g. either accepting payments from overseas and/or other currencies is unacceptably high, or because the cost of making these cross-border payments is too high for my clients, or because transferring money between accounts is unacceptably costly, slow, inconvenient, etc etc. But all this is based on my specific circumstances including my portfolio of clients, so these may vary from translator to translator.
I agree that paypal is not the best way to receive money because of all the hidden costs, but I have discovered that pay pal is a great way to transfer money between your own international bank accounts for no fee. Rather than make a payment, you want to transfer money to your own pay pal account. That money can then be transferred to any another account you enter, including your own in another country.
@ sarahdillon
December 8, 2009 at 11:53 pm
@DM Of course. We’re in business – the risk of loss is inherent in everything. And it is the responsibility of each individual to manage that risk as best as possible, given their specific set of circumstances.