Net 30, 60, or 90? Payment Terms Strategy for Translation Agencies

Let's talk about something that keeps LSP owners up at night but nobody really wants to discuss at industry meetups: payment terms.

You know that awkward moment when a new client asks, "What are your payment terms?" and you freeze up? Yeah, we need to fix that.

Because here's the brutal truth – your payment terms can make or break your translation business. And I'm not being dramatic. I've seen agencies with solid revenue go under simply because they were offering Net 60 to clients while paying translators Net 15. The math just doesn't math.

Why Payment Terms Are Your Secret Weapon (Or Silent Killer)

Most translation agency owners think payment terms are just... administrative stuff. Something you mention at the end of a proposal. But that's like saying fuel is just something you put in a car – technically true, but missing the entire point.

Your payment terms directly impact:

• Cash flow (obviously)
• Which clients you attract (big corporations vs. startups)
• Your negotiating power (yes, really)
• How much money you need in the bank (your operating capital)
• Vendor relationships (because translators need to eat too)

I once talked to an LSP owner who was doing $40K in monthly revenue but had $28K sitting in unpaid invoices at any given time. She was literally working a part-time job to cover her rent because the business "couldn't afford" to pay her. The business was profitable on paper. Just not in her bank account.

That's the payment terms trap.

The Real Cost of Being "Flexible"

Here's what typically happens: You're hungry for a big client. They're a Fortune 500 company. They casually mention, "Oh, we're on Net 90 terms with all our vendors."

You think: "Ninety days? That's only three months. I can handle that."

Narrator voice: She could not, in fact, handle that.

Let's do the math on a $10,000 project:

• Day 0: You sign the contract (exciting!)
• Day 5: You pay your translator 50% upfront ($2,500)
• Day 15: Project delivered, translator gets the remaining 50% ($2,500)
• Day 16: You invoice the client ($10,000)
• Day 106: You FINALLY get paid (if they actually pay on time, which... lol)

You just fronted $5,000 for over three months. And that's ONE project.

Now multiply that by 10 simultaneous projects. You're now a bank that does translation work on the side.

The Net 30, 60, 90 Breakdown (What Nobody Tells You)

Net 30: The Sweet Spot (Usually)

This is the Goldilocks of payment terms for most mid-size translation agencies. Not too aggressive, not too soft.

The reality: Most clients actually pay around Day 35-40. Add in 5 days for bank processing, and you're looking at 45 days from invoice to cash.

When Net 30 works:

• You've got decent cash reserves (at least 2 months of operating expenses)
• Your clients are mostly mid-market companies
• You can negotiate Net 15 or Net 30 with your translators
• You're not trying to scale aggressively

Net 60: The Danger Zone

Sixty days feels reasonable until you realize that's TWO MONTHS without seeing a penny for work you've already paid for.

I call this the "agency graveyard" because this is where most LSPs start getting into trouble. You take on more work to cover the cash flow gap, which creates... a bigger cash flow gap. It's a hamster wheel made of invoices.

When Net 60 might work:

• You're established (3+ years in business)
• You have a line of credit or serious cash reserves
• The client is worth 30%+ of your annual revenue (enterprise client)
• You've built the cost of financing into your rates (more on this later)

One trick I've seen work: Offer a 2% discount for Net 30, making Net 60 the "standard" rate. Suddenly, you're incentivizing early payment without looking desperate.

Net 90: The "Are You Insane?" Territory

Let me be clear: Net 90 is rarely a good idea for translation agencies unless you're playing 4D chess.

Three months is a QUARTER of the year. The entire market conditions changed at that time. I've seen:

• Clients go out of business before paying
• Budget freezes that delay payment to 120+ days
• Your translator relationships deteriorate because you can't pay them promptly
• You, the owner, are taking out personal loans to make payroll

The ONLY time Net 90 makes sense:

• The project is massive (think $100K+)
• You can negotiate milestone payments (30% upfront, 30% midway, 40% on completion)
• You've added a 15-20% "financing fee" into your rate (without calling it that)
• You have the capital to absorb it

The Strategy Most Successful LSPs Use (That You Can Steal)

Here's what the translation agencies that aren't constantly stressed about money actually do:

1. Tiered Payment Terms Based on Client Risk

New client = Net 15 or 50% upfront Established client (6+ months, good payment history) = Net 30 Enterprise client with ironclad contract = Net 45-60

The mistake is giving everyone the same terms. Your terms should reflect your risk.

2. The "Early Payment Discount" Trick

Instead of saying "Net 30," say: "Net 30, or 2% discount for payment within 10 days"

Psychology is weird. Suddenly, clients feel like they're getting a deal. And 2% off is cheaper than the actual cost of you waiting 30 days for money.

3. Milestone Payments for Big Projects

Never, EVER take a $50K+ project on back-end payment terms. Just don't.

Structure it like:

• 30% upfront (before work starts)
• 40% mid-project (when first deliverables are done)
• 30% on completion (Net 15)

This is non-negotiable if you want to sleep at night.

4. Build Financing Costs Into Your Rates

If a client demands Net 60, that's a financial service you're providing. Price it accordingly.

Take your base rate and add 1-2% for every 30 days beyond Net 15. A client on Net 60 pays about 3-4% more than a Net 15 client. You don't tell them this explicitly – it's just built into your "enterprise client" rate structure.

The Tools That Make This Actually Manageable

Look, you can have the perfect payment terms strategy, but if you're tracking it all in spreadsheets or sticky notes, you're toast.

This is where having a proper Translation Business Management System matters. With something like Awtomated, you can actually SEE your cash flow in real-time – not when you're panicking at month-end, wondering why you can't make payroll.

You need to know:

• Which invoices are coming due
• Which clients consistently pay late
• Your actual cash position (not just your revenue)
• Whether you can afford to take on that new project

The LSPs I know who've switched to Awtomated's finance module report actually understanding their business finances for the first time. One owner told me, "I used to guess if I could afford a new hire. Now I know."

That's the difference between running a business and hoping a business runs.

The Conversation You Need to Have TODAY

If you're already locked into bad payment terms with existing clients, here's your escape plan:

Email template you can actually use:

Hi [Client], As we enter our [X] year working together, I wanted to discuss our payment terms. Our current Net [60/90] terms are creating some operational challenges for us. Starting [date 60 days from now], our standard terms for new projects will be Net 30. For your account specifically, we'd like to offer a transition: Net 45 for the next quarter, then Net 30 thereafter. Alternatively, we can maintain Net [60] terms at a rate adjustment of [5-8%] to account for extended financing. I value our partnership and want to find a solution that works for both of us.

You'd be surprised how many clients just say "okay" to Net 30. They were probably just copying terms from another vendor anyway.

The Bottom Line

Your payment terms aren't just paperwork. They're a strategic decision that affects every part of your business.

Net 30 is your baseline. Anything longer needs to be justified by client value AND compensated in your pricing. Anything shorter (Net 15, upfront payments) should be your goal for new or risky clients.

And please, PLEASE, stop treating cash flow management like it's something you'll "deal with later." Later is how agencies end up in crisis mode, taking terrible projects just to keep the lights on.

Track your payment terms in a real system (yes, like Awtomated), build financing costs into longer terms, and don't be afraid to negotiate.

Your translator's mortgage payment doesn't wait 90 days. Neither should yours.

Want to see how translation agencies are managing complex payment terms without the spreadsheet nightmare? Awtomated's finance module gives you real-time visibility into invoices, payments, and cash flow – all in one place. Because your LSP deserves better than guesswork.