Client will only pay if their clients have paid - contract

[sc0rmful]

He is just making a point that you don't seem to be understanding how contracting works... unless you are going umbrella.

I really do understand, I'm just trying to work out if the risk is worth it. I will be starting out with 2 months of savings. Everyone has to start somewhere and I think 2 months savings is on the low end. Given the volatility of contracting and the big red flag in my contract, I'm trying to figure out if the risk is worth it.

I understand that contracts could end at any point in time (very short notice period) and you have to be prepared for this inevitability.

[northernladuk]

I really do understand, I'm just trying to work out if the risk is worth it. I will be starting out with 2 months of savings. Everyone has to start somewhere and I think 2 months savings is on the low end. Given the volatility of contracting and the big red flag in my contract, I'm trying to figure out if the risk is worth it.

I understand that contracts could end at any point in time (very short notice period) and you have to be prepared for this inevitability.

It was more the comment of 'payslips'. That sounds more like permie speak.

[sc0rmful]

It was more the comment of 'payslips'. That sounds more like permie speak.

Oh I see. Let me rephrase that. "Paid invoices"

[sc0rmful]

Back to the main point. Is this clause too much of a risk? Would YOU accept this? Are they being unreasonable. I think more than 50% of their staff are contractors so they are looking for some protection should a large customer do the dirty.

[BolshieBastard]

Welcome to contracting. Things are different now, you'll be exposed to such risks.

Let's be honest though, most people switching from perm to contracting dont have a warchest never mind a big one.

This isnt a problem if you can live on minimal drawings from your co until you build the warchest up. A word of warning though, in this market you may find your warchest goes down as quickly as it goes up!

Starting in contracting now is a lot harder than when I started out. then, 26 week contracts were the norm. Now, 13 weeks is standard.

As for using the term 'payslip,' so what? if you've just come from a permie background i dont see the big deal.

Bottom line is you have to make a decision to go with such terms in a contract. Im fortunate in that I can be a little more choosey although that's backfired on me this year. Ho hum! No one can tell you what to do, only you know whether you can extend 2.5 months without payment to 3.5 maybe 4.

If you cant get the clause removed, you're options are to agree to it or decline the contract. But, if your reserves are low now, what difference is it going to make?

[TheFaQQer]

Is this clause too much of a risk?

Possibly. Depends on whether you think that their clients are going to refuse to pay or not. I've seen quite a few disputes between consultancy and client (including one where they knocked £3million off the bill) - the bigger the project, the more likely the argument.

What happens if they pay part of the bill, but not all of it? Are the consultancy billing your time individually, so it's clear that your time is being paid but someone else's isn't being paid by the client? Are there any penalty clauses in the consultancy-client contract which might mean that the client doesn't have to pay? I did an implementation a long time back where the penalty clause between client and consultancy was £1 million a month for late delivery.

Would YOU accept this?

Possibly, but I doubt it. If the role was something fantastic, and I thought the risk was very low, then I might. It also depends on who the consultancy are - some may have a different reputation than others when considering whether their clients pay or not.

I think more than 50% of their staff are contractors so they are looking for some protection should a large customer do the dirty.

The chances of a customer doing the dirty might be low. The chances of a customer having a legitimate claim for reducing their bills may be high.

On the plus side, it shows taking a risk which could help your IR35 status.

[Zippy]

It seems to me that there is a fair amount of potential for messing you about. How will you know if the end client has paid (i.e. how will you know if you are being fed a load of crap when you don't get paid)?

I'd see if you can get firm payment terms from your client. If you can't, it may just be worth the risk to get some contracting experience under your belt. I have to say I wouldn't do it myself.

Best of luck.

[Wanderer]

Oh I see. Let me rephrase that. "Paid invoices"

That's better. Now mind your P's and Q's or the permie-speak police will bite you again.

[VectraMan]

The business has been around since the 90's and have always made use of contractors but it's a tough market, they aren't a big player and I think they are nervous about getting paid late (or not at all) from a big client and having to pay all of the contractor invoices. They aren't big enough to absorb those sort of costs.

They're obviously going to charge their client more than they pay you. So they're getting all the profit, and transferring all the risk onto you.

In the event of the dispute, you can bet their costs will come first. All they have to do is settle for the amount that covers their cost, and because they know they don't have to pay their contractors, they don't lose anything.

It's quite a clever way to run a business. You just need a ready supply of idiots to make it work.

[borderreiver]

Back to the main point. Is this clause too much of a risk? Would YOU accept this?

Never, unless I was absolutely desperate.

In essence, what this clause means is, they will pay you if and when they feel like it.