Client will only pay if their clients have paid - contract

[JoJoGabor]

I too am working for a consultancy right now with, shall we say a cash flow problem. Their credit rating is zero and when I was contracting direct I had no end of payment problems, at one point was owed over £30k. I have received all that money and now go through an agency who now take the brunt of getting paid late, I am fine now and get paid a week In arrears. Many people advised me to leave, but in hindsight it's worked out ok-Ish this time and the rate is fantastic.

My point is weigh up the risks and try to negate those, such as better payment terms, a higher rate, use of an agency or payment factoring and go from there.

[bobspud]

Hi,
You might want to take a look at debt factoring. There are companies that will pay you on invoices raised and handle the longer payment terms from your client. Once you have an idea of how much it will cost you to factor the invoices increase your rate to cover that cost if they won't handle that increase then walk. Either way don't be a free bank for larger clients

[Safe Collections]

Never, unless I was absolutely desperate.

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

This.

My point is weigh up the risks and try to negate those, such as better payment terms, a higher rate, use of an agency or payment factoring and go from there.

Great idea, if you can reduce your payment terms, you reduce your risk and this can go some way to negating the negatives of a "we pay when we get paid" clause. But only if they pay on time...

Hi,
You might want to take a look at debt factoring. There are companies that will pay you on invoices raised and handle the longer payment terms from your client. Once you have an idea of how much it will cost you to factor the invoices increase your rate to cover that cost if they won't handle that increase then walk. Either way don't be a free bank for larger clients

Invoice/debt factoring is not a magic bullet. In the event that an invoice you have factored goes unpaid you can expect the factoring company to go at the client with extreme prejudice until they get their money and if that doesn't work, they just take the funds back from your company and you are left with the task of collection.

[d000hg]

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

Risks, yes. Not getting paid as a condition in your contract, absolutely not. You are due to be paid for work you do, not dependent if the client has a good month.

[moggy]

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

Who is this.. and what have you done with the real NLUK??

[Taita]

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.

A good reply! Unless they are a well established, well known consultancy with a reputation to lose, you may not easily discover/know when/if they have been paid.

Alternatively, if the end client is Public Sector your client will probably be paid 30 days (or less) from date of invoice but they may then take a week or two to pay you ( no deliberate delay but normal accounts system speed). Ask for some reassurance in the first instance. If they contract many contractors they are probably keen to keep them relatively happy.

If the end client is Private Sector then your client may have agreed to up to 60 days credit which would be a problem for you. Smile nicely, assume they are good guys and ask some direct questions! You may be very pleasantly surprised. Clients/Agents are not necessarily always out to get you......