What do agents earn on holding our money as long as posible?

[doodab]

Guys,

I am rookie.

What is NLUK and factoring?

Factoring is when the business borrows money against it's outstanding invoices from the bank. They might be able to borrow something like 70% of the invoice amount until the due date and pay a 5% fee for the privilege, for example. This means they don't need as much working capital but obviously the fee comes out of their margin and reduces their profitability somewhat.

The problem is that the bank will still expect their money back when the client pays late. So the agency isn't just short the difference, they also need to find the money to pay the bank and that will tend to take priority over paying contractors as no pay banky means no borrow any more money. It will also have an adverse effect on how much they can borrow as a %age of a particular invoice which if they have a lot of contractors on the go will add up to a serious wedge of cash especially when you realise they will have 2-3 months worth of invoices outstanding (most agency-client payment terms are much longer than the ones we get from them). A £10k late payment can easily make a £50k black hole in an agencies finances and that's 5 contractors who don't get paid instead of one. A persistently late paying client responsible for a large chunk of a small agencies business can send them to the wall even if they pay eventually.

[doodab]

Well, there is a huge difference between a late payment and no payment, which is my case.
There is no payment, and the payment terms are very well defined in my contract.

BTW, the agent doesn't need to know that the contractor told the client to stop paying. Let him think it's a delay.

You can only fight fire with fire.

It's not the agent who hasn't paid you though, it's the brolly. Aside from persuading them to get started recovering the debt from the agency you don't have any fire to fight with.

[Lola C]

It's not the agent who hasn't paid you though, it's the brolly. Aside from persuading them to get started recovering the debt from the agency you don't have any fire to fight with.

The brolly didn't pay because the pimp didn't pay. I don't want more money to disappear in that black hole, the pimp may be sitting somewhere in Monte Carlo already. If I have lost the current payments, I don't want to lose the future ones.

[MPwannadecentincome]

The brolly didn't pay because the pimp didn't pay. I don't want more money to disappear in that black hole, the pimp may be sitting somewhere in Monte Carlo already. If I have lost the current payments, I don't want to lose the future ones.

So have you set the brolly onto the agent yet?

[Taita]

I work through a brolly so I am technically an employee.
He owes us over 30k.

Previous advice prevails........get your brolly to scream and do the same yourself. You may also wish to run a quick credit check on the agency (brolly can do this). If it does not look good, it is probably very bad, indeed. Sorry if I am sounding like a doom monger but if the agency has cash problems you need to know sooner rather than later. Good luck.

[craig1]

A rare defence of agencies from me here:

Agencies just follow business practices from making their AP (accounts payable) average days as close to, if not greater than, their AR (accounts receivable) average days. Good business practice for a high turnover company is that average AP days should be greater than average AR days. There are some very complex equations that take into account high value payments and weight them accordingly, for example a £100,000 late incoming payment is far more critical to a medium size business than a £100 one. A simple example, I buy goods in to resell to a client at, say £1000 on 30 day terms with the goods supplier and resell them with 45 day terms to the client, that means I'm going to have lost at least 15 days use of that £1000 and have to ensure my cash flow is good enough to cover it.

When it comes to agencies and contractors it becomes even more difficult for them as many contractors have weekly payment terms while the client will be pushing for 45 day plus terms, I know more than a few clients with 90 day payment terms and one with 128 day payment terms (I can't name this one due to confidentiality clauses). Take that 90 day one and a contractor on weekly invoice, weekly pay getting £500 a day, the agency will have had to pay out around £32000-£40000 (depending on if the client demands monthly invoicing) before they get a penny back in; 10 contractors on that rate means £320,000-£400,000 that the agency will have had to pay out with only a promise that the client will pay on time. If the agency can delay paying even one week on contractor invoices then that AR deficit shrinks and the cash flow situation gets better, change contractors from weekly bill weekly pay to monthly bill monthly pay and their cash flow gets almost tolerable.

I worked with one agency in 2011 that had 90 day monthly bill terms with the client, I had weekly bill weekly pay terms. They took an open book margin of 4% that I know was true because it came out of my own project budget. To this day I have no clue how they stayed in business given that many others were on the same terms and fixed margin.

[Lola C]

My personal payment term is 45 days.

[NickNick]

My personal payment term is 45 days.

So, out of interest, what have you done to try and get the £30K back that you are owed? Jsut so that people here can offer advice based on what you have already tried.

[Lola C]

So, out of interest, what have you done to try and get the £30K back that you are owed? Jsut so that people here can offer advice based on what you have already tried.

I raised it with the client who contacted the agent and only then he paid.
He said he sent money today.

[Lola C]

Hi guys,

The pimp is not paying again, he went underground and does not answer emails or phone calls. (
He is a week overdure with the payment for April, and I have 2 other payments outstanding in the future.

What can I do?? My umbrella is not very helpful and seems to be quite passive.