Client in administration

[uncle_albert]

The retail client I contract my services to has just gone into administration (you can probably guess who it is!) but has been 'part bought out' by another company who is simply buying the stock and stores, not the debt.

I'm contracting direct with them on 30 days payment terms.

Been told that my July invoice is with the administrators (2p in the pound I'm hearing!) but the steer given from them is that they expect everyone to continue to work on the project whilst 'things are sorted'.

Technically my contract is null and void I guess.

My first inclination is to jump ship and take it on the chin (I put my loss at around £18k) but would welcome others thoughts and if anyone has been in a similar position before?

Thanks,
Albert

[jamesbrown]

Sorry to hear that.

May be worth shooting a PM to Safe Collections, but I doubt there's much you can do at this stage, except clarify and limit your ongoing exposure.

Are you with IPSE?

I think you can get up to 10k compensation via your IPSE+ membership if a client or agent goes under.

[madame SasGuru]

Ouch.

I think you also need to check what is happening for your days in early August. If you will be paid for them it’s not a total loss and you have a decent reason to stay (7-8 days invoice /money) otherwise it’s a hard decision.

If however you have to invoice 1-10 of August to the administrator and other work is easy to find a break may cheer you up a bit

[WordIsBond]

Do you have a contract with the new owners? If not, why should you keep on working? That's the question I'd be asking.

If you have a contract with the new owners, then your work going forward is likely to be paid.

If you don't have a contract with the new owners and your existing contract is not going to be honoured for days prior to 10 August, what assurance do you have that it is going to be honoured for days after that?

If they really want you to take this kind of hit and just keep on because they need their project completed, it might be time to talk to a few other contractors and sit down with management and say, 'You know, you are employees so you'll be paid. We're taking a huge hit and you want us to just carry on as if nothing happened.'

If they really need you, you should be able to negotiate something that at least partly mitigates it. Personally, I'd be looking for one of two things -- either a 50%+ guarantee of the lost money from the new owners, or a new contract at a higher rate (at least 10-15% higher) to compensate you for the risk you are taking in contracting for them. But that only works if they need you and you have leverage.

I know this is painful, but I hope this is a valuable lesson for others reading this. It is not exactly a surprise that these guys have been in trouble. If you have a client who is obviously struggling, you should be A) checking contract terms B) considering bailing out C) insisting on shorter payment terms D) taking out IPSE+ or comparable.

At least it renders you IR35-proof, probably for a while. Yeah, IR35 is on a contract by contract basis, but what tribunal is going to say that someone who just lost £18K on another contract is a disguised employee?

On a broader point, it illustrates the folly of saying that IR35 should only be driven by 'working practices.' It doesn't matter what your working practices are, if the client goes into administration you aren't going to get paid for your services but employees almost always will. You might have the same working practices and be doing the same job but there's a huge difference in risk, not just that you'll be out of work with no notice or redundancy, but even that you might not get paid for the work you have done. That may not be a risk in the public sector but it is in the private sector.

[BlasterBates]

Since it is now in administration payment going forward won't be a problem there is no point in jumping ship to limit bigger losses, i.e. the horse has bolted. It would be illegal for administrators to do that. If you have no other contract, limiting your losses involves continuing with a new contract. The 18K is probably gone but you should try to negotiate some sort of rate increase/bonus to compensate.

[uk contractor]

OP sorry you lost £18K (your unlikely to get anything of that back worth talking about so ask Mike Ashley for £18K in Sports Direct vouchers!). You should always bill ASAP & hassle to get paid ASAP to avoid this scenario as its ultra rare to recover unpaid money if the client, agent or agency go missing or hit financial issues. You will be back of the very long queue for any payment so the money is as good as gone forever.

[LondonManc]

Express your concern at expecting to work for less than 30p a day - you're not a perm at Sports Direct after all.

[PerfectStorm]

Your contract's with an agency, right? If you're lucky the client's situation may have nothing to do with it

If you opted in you might still be able to get it?

Also IPSE cover looks pretty good at the moment.

Failing that, you may have to take the payment in footballs and Dunlop umbrellas

[b0redom]

Your contract's with an agency, right?

No.

I'm contracting direct with them on 30 days payment terms.

[mudskipper]

Also IPSE cover looks pretty good at the moment.

To be clear, IPSE+ will pay out as long as you have been an IPSE+ member for 60 days prior to the event. You can't insure yourself after it's happened!