Going direct from a subcontract

[Clarkee21]

Hi All

I'm looking to get some advice from those with a bit more experience in "going direct" and what you would do in this scenario.

I'm currently working as a subcontractor for a consultancy with the contract being through an agency. The gig has me working pretty much 100% on-site for one of the consultancy's clients.

I've recently been approached by their client and asked if I would be willing to work for them directly instead though. The consultancy knows about this and have suggested to the client that it's probably a better way to go in the long-term.

So all going well the dilemma I now have is whether to go direct to the client through my own company or talk to my agency about moving across to them instead.

I've researched online about pros & cons - me having to do invoice chasing etc. - but what I can't find is people's experiences of making the jump to direct.

I've a good relationship with this agency so part of me is thinking continuing with them and get them to handle the usual paperwork, rate negotiations etc. for me. On the other hand I've seen the mark-up that's being made on my day rate so taking the two other companies out the picture may set things up for a longer contract & better future rate.

What would you do?

Are there any pitfalls I should be watching out for?

What about the legal side? Do you have a template contract you tend to adapt or get a solicitor to deal with it all?

Any hints and tips appreciated.

Thanks a lot.

[RonBW]

If you can a good contract, including good payment terms, with the client then you would be crazy to add an extra link in the chain who can disappear with your money.

If you need better payment terms with the client than they want to give you (my contract has a sixty day payment clause on monthly invoicing), then you may well be better taking a hit (someone has to pay) and include an agency in the mix.

Good luck with whatever you decide.

[MrMarkyMark]

If you can a good contract, including good payment terms, with the client then you would be crazy to add an extra link in the chain who can disappear with your money.

If you need better payment terms with the client than they want to give you (my contract has a sixty day payment clause on monthly invoicing), then you may well be better taking a hit (someone has to pay) and include an agency in the mix.

Good luck with whatever you decide.

Agreed, if you go truly direct, be prepared to wait up to 90 days for your money.

[LondonManc]

If you can a good contract, including good payment terms, with the client then you would be crazy to add an extra link in the chain who can disappear with your money.

If you need better payment terms with the client than they want to give you (my contract has a sixty day payment clause on monthly invoicing), then you may well be better taking a hit (someone has to pay) and include an agency in the mix.

Good luck with whatever you decide.

It depends imho - partly on how risk averse you are - the agency can probably offer weekly terms on this, given the lack of effort they've had to put in to get the gig. Why have sixty days of money at risk when you only need to risk 5-10?

That said, come extension time, there's no agency in the middle to cock the negotiations up!

[northernladuk]

Do you actually know how much the rate will be to go direct? I wouldn't be too quick to assume you will get the full chuck of the agents money as well. They did something for that money so any savvy client will save a bit of that money if the agent is no longer in the loop. They might not and happy days but don't make that assumption.

If you know exactly what the client gives you could try find an agent that will take a minimal cut to factor and sort contracts out for you?

[Clarkee21]

Do you actually know how much the rate will be to go direct? I wouldn't be too quick to assume you will get the full chuck of the agents money as well. They did something for that money so any savvy client will save a bit of that money if the agent is no longer in the loop. They might not and happy days but don't make that assumption.

If you know exactly what the client gives you could try find an agent that will take a minimal cut to factor and sort contracts out for you?

Thanks Northernladuk, and everyone for the quick feedback.

Not specifically. I know how much of a mark-up the consultancy + agency are making just not a further breakdown. To be honest I'm more interested in keeping the contract rolling at this stage but if the agency is brought across I'm tempted to follow LondonManC's advise. I've done the leg work for them and the client is saving money so an extra slice for me seems justified if one company is taken out the loop.

Thanks again

[LondonManc]

Thanks Northernladuk, and everyone for the quick feedback.

Not specifically. I know how much of a mark-up the consultancy + agency are making just not a further breakdown. To be honest I'm more interested in keeping the contract rolling at this stage but if the agency is brought across I'm tempted to follow LondonManC's advise. I've done the leg work for them and the client is saving money so an extra slice for me seems justified if one company is taken out the loop.

Thanks again

Don't forget to get any new contract and schedule of work reviewed as being IR35-friendly, assuming that this isn't a continuation and that you're on a project, not BAU creeping into part and parcel territory.

[northernladuk]

Don't forget to get any new contract and schedule of work reviewed as being IR35-friendly, assuming that this isn't a continuation and that you're on a project, not BAU creeping into part and parcel territory.

And it won't reset the 24 month clock

IPSE have some templates you could use if you are cutting the agent out and need your own.

[ladymuck]

Do check the contract you have with the agency as they may have a handcuff clause in there. They may be nice and waive it, especially if the client tells them to.

[Clarkee21]

Do check the contract you have with the agency as they may have a handcuff clause in there. They may be nice and waive it, especially if the client tells them to.

All good points. Thanks all.

From what I recall this agency tends to put a clause in the client's contract to say I can't work for them for 6 months after the contract termination date. In this case the client is the consultancy so with them stepping to the side and allowing their client to take over I'm hoping that's not an issue. I'll need to find out how it's been phrased.

Thanks again!