Agency Withhold Payments

[tookers]

Hi there,

I'm new to the forum, but have been contracting for almost 3 years.
At the end of September I started a new contract in Central London, the agency seemed reputable from discussions I'd had with them.
Soon after starting the contract cracks began to appear, they had never requested any company bank details and had no formal payment process in place.
My accountants sent invoices to the agency on a monthly basis, and I would constantly have to chase them as they never gave any notification that the invoice had been processed or paid. After a few months it became more frustrating, with the agency completely ignoring my phone calls & emails. After checking the agencies background I found the name they currently trade under is registered with Companies House, but is currently classified as non-trading and they have posted zero accounts for as long as the company has been registered.
Seeing this information and enduring their unprofessional attitude I'd had enough and served them notice as per the contract requirement (1 week). I spoke with the client and explained the situation and they where understanding, and I completed all the work they required.
The agency questioned why I was leaving, I didn't feel obliged to give them any reason as I felt this may affect the payment of outstanding invoices.
I submitted my final invoice over a month ago and heard nothing from the agency.

So my problem now, I contacted the agency last week to check status of outstanding invoices, they are withholding payment on my final invoice. The reason they stated is that they believe the client will not pay, and that the agency are awaiting the client to confirm they are happy with the work completed.
I have spoke with the client several times since leaving and they have no concerns whatsoever, they also informed me they have not received the final invoice from the agency.
The invoice due date has now passed and the agency are failing to return my calls / emails.

Can the agency withhold payment, considering they have not even attempted to collect payment from the client?

[cojak]

Search this forum for 'Dunning' - you'll find a lot of recent information.

[TheFaQQer]

My accountants sent invoices to the agency on a monthly basis

While you wait to get paid, you might want to spend some of that time checking up on the MSC legislation.

[Pondlife]

^^ This.

Plus it sounds like the agency is shambolic if they've not invoice the client themselves.

[tookers]

Thanks I will take a look at those!

I've just spoke with the client again and they have confirmed they are fully paid up as of 5/12.
So this means the agency either hasn't sent the final invoice to the client, or they did send the invoice and have received payment and just want to play hardball

[Safe Collections]

Whatever you plan to do to recover your money, you need to get started ASAP.

The fact this agent is using a dormant company is never a good sign, especially if they appear to have been trading whilst dormant for an extended period. Chances are as a dormant/non-trading company they will have little in the way of assets available (at least on paper).

This coupled with the fact that they haven't even invoiced the ultimate end client yet would seem to paint a picture of an agency that is disorganised to the point of being barely functional and in our experiences these types of businesses rarely last long...

Although on the plus side the fact you remain on good terms with the end client could benefit you in the long run, especially if they retain the funds due to be paid to the agent.

Our suggestion would be a formal final demand for payment in full in 7 days followed by a debt collector/commercial litigation solicitors.

[tookers]

Thanks for the advice, and light reading! Much appreciated.
It seems the agency had actually received payment from the client on 5th December, and where holding it as ransom stating that if I told them my reasons for leaving it would clear up any issues in receiving payment from the client.

I received an email this morning from their accounts and apparently they sent payment last week, which again is rubbish as I regularly check my accounts and they only sent it this morning.

Lesson learnt.

Thanks Guys

[Safe Collections]

Thanks for the advice, and light reading! Much appreciated.
It seems the agency had actually received payment from the client on 5th December, and where holding it as ransom stating that if I told them my reasons for leaving it would clear up any issues in receiving payment from the client.

I received an email this morning from their accounts and apparently they sent payment last week, which again is rubbish as I regularly check my accounts and they only sent it this morning.

Lesson learnt.

Thanks Guys

That's good news, small agencies are notoriously difficult to recover monies from even when they are trading legitimately and not dormant as in this case.

In our opinion it is always worth spending the £20 to get a credit report before you extend credit to an unknown company. Its all well and good having a great rate, but its useless if the invoice is never paid