Strange expense situation

[JamJarST]

So my current clientco is extremely tardy with payment of monthly expense invoices (we're talking in the region of 90 days if you're lucky, and there is a LOT of travel involved weekly), and the agent will not pay the expense invoice until they have received funds from the client ('time' invoices are at least paid on a monthly basis regardless).

Agent has spoken to client but appears unable to speed things up, which is bad as the expenses are racking up, so the agent has proposed the following 'scheme' that affected contractors can opt in to if they wish:

- For a charge of 0.5% of the full (Expense invoice) amount, agency will pay 85% of the monthly expense invoice (minus the charge) towards the end of the month, i.e. a regular payment of at least the majority of the expense invoice amount.
- Remaining 15% paid when funds are finally received from client.


This raises two immediate questions for me:

1) Anything weird with this set-up from an IR35 point of view? I mean, I'm invoicing for legit contractual expenses yet I need to pay a fee if I want most of this to be reimbursed within a reasonable timeframe.

2) How on earth would I account for that in the books? I guess I would record the 0.5% fee as a purchase of a 'payment expedition service' or similar.


For the record, contract just states 'expenses will be paid upon receipt of payment from client', so no play there (yeah yeah, should have been stated clearer I know I know, but for first contract, beggars can't choosers).

What does your contract have to say in respect of payment terms and late payment? If it were me I would expect the Agent (the client I actually invoice) to pay my invoice/s on time regardless of their arrangements with their client. If they were late I would put them on terms and start dunning and ultimately withdraw my service if it continued.

[tractor]

..

What does your contract have to say in respect of payment terms and late payment? If it were me I would expect the Agent (the client I actually invoice) to pay my invoice/s on time regardless of their arrangements with their client. If they were late I would put them on terms and start dunning and ultimately withdraw my service if it continued.

Precisely. This is one of the things that should ring alarm bells and be ironed out in your favour when reviewing your contract even before you send it for IR35 review.

If it slipped past you at that stage, then the agent may well be able to factor your invoices but they will want a fee. I can't actually see anything commercially wrong with that IF it slipped your notice prior to you signing the contract.