Client will only pay if their clients have paid - contract

[sc0rmful]

Firstly, I'm new to contracting.

I'm about to sign a new contract with a new client and there is a section in the contract that states that I won't be paid if they (my client) have not been paid by their clients.

I will be contracting for a consultancy and doing work for their clients.

Is this standard? I'm worried that one of their big clients will pay late and that will affect me. I can't really go without pay for two months due to the mortgage etc.

Thanks

[Swamp Thing]

Coming from an end user client, I think this is highly irregular and raises a question over their own cashflows – are they a large co or small? Can your billings really make a difference to their cashflow?

We see this with pimps – who make a slightly better argument for this (i.e. multiple contractors but clients paying them irregularly, need to avoid factoring blah blah). But clients? I’d ask more questions here and perhaps run a credit report on them.

[TheFaQQer]

Is this standard?

Absolutely not.

I can't really go without pay for two months due to the mortgage etc.

So what are you planning to do when this contract ends and you can't find another one quickly? Are you sure you've thought the move to being self-employed through carefully enough??

[northernladuk]

Firstly, I'm new to contracting.

I'm about to sign a new contract with a new client and there is a section in the contract that states that I won't be paid if they (my client) have not been paid by their clients.

I will be contracting for a consultancy and doing work for their clients.

Is this standard? I'm worried that one of their big clients will pay late and that will affect me. I can't really go without pay for two months due to the mortgage etc.

Thanks

I have to wonder where your warchest is if you can't live with a few months of not billing.....

[VectraMan]

I would run away. I imagine a consultancy with corporate clients will have long payment terms, so you could easily be waiting months for your first payment.

Plus as somebody else says, it raises some big questions on the financial state of your client.

[northernladuk]

I would run away. I imagine a consultancy with corporate clients will have long payment terms, so you could easily be waiting months for your first payment.

Plus as somebody else says, it raises some big questions on the financial state of your client.

The last two consultant to client roles I did I couldn't get less than 30 days. One started at 45, the other offered 30 and wouldn't budge. I didn't have that clause but had not problems getting paid.

[sc0rmful]

Payment terms of 35 days.

I don't have a warchest. I've been struggling to build one being a perm. After my first few pay slips as a contractor I will have a little warchest that I will continue building. It's obviously better to go from perm to contract with a good amount of savings but I won't be doing this. I would have to work for another 12 months before having a warchest.

I can survive for around 2.5 months with my current savings. Contracting will allow me to put more cash away quickly and get me started on my contracting career.

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. Many people have contracted there before and had no problems though, I hear a rumour that a few contractors did have a problems a few years ago though.

Does this contract have too many red flags for me too go forward with?

Should I wait another year then (more savings) then take the plunge. I want to stop living pay slip to pay slip. Contracting will enable this very quickly.

Is there some sort of insurance I can take out to cover me if the worst happens or does the fact that this is written into my contract make that not possible

[TheFaQQer]

After my first few pay slips as a contractor

[sc0rmful]

I guess from that you're telling me that I shouldn't become a contractor until I have enough saving to not depend on my first two contracting pay slips.

Is it possible at all to start contracting with no savings? As long as I can get paid for the two months I will be fine. I guess the risk is that the contract will end (or the customer doesn't pay) before those two months are up.

The only responsibilities I have at the moment is rent. Worth the risk? If it works then I will be in a much better position to continue to carve out a career as a contractor.

[northernladuk]

I guess from that you're telling me that I shouldn't become a contractor until I have enough saving to not depend on my first two contracting pay slips.

Is it possible at all to start contracting with no savings? As long as I can get paid for the two months I will be fine. I guess the risk is that the contract will end (or the customer doesn't pay) before those two months are up.

The only responsibilities I have at the moment is rent. Worth the risk? If it works then I will be in a much better position to continue to carve out a career as a contractor.

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