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Consultancy witholding 20% of each invoice in new contracts

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  • northernladuk
    replied
    Originally posted by eek View Post

    The problem is - in a very wishy washy T&M agreement with flexible requirements - how do you determine prior to the contract beginning what the criteria is.
    Absolutely. I'd imagine in a vast majority of cases they'll honour it.. it's just that one that goes wrong and they are up the creek. Knowing the size of the client and the size of the consultancy will help. If they are both monsters they less to worry about than a small start up and two bit new consultancy.

    EDIT : It's Public Sector isn't it and you did say well known consultancy sorry. That should give you a bit more confidence.

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  • mallisarealperson
    replied
    Shame they cannot get a 20% increase in case of inadequate performance by the end client

    Leave a comment:


  • The Spartan
    replied
    It does seem very vague on what adequate performance is, additionally it's only been dropped on several contractors I've previously worked with 2 weeks till their current contracts expire. Maybe it's a coincidence however it does seem the timing may benefit the consultancy in some capacity.

    Leave a comment:


  • eek
    replied
    Originally posted by northernladuk View Post

    Absolutely. If they want to withhold it I'd want to see very clear definitions of what the criteria is for it to be released. Very clear and tangible activities should be listed so they can be assessed and if need be argued. A general 20% and we'll pay you at the end is not acceptable at all.
    The problem is - in a very wishy washy T&M agreement with flexible requirements - how do you determine prior to the contract beginning what the criteria is.

    Leave a comment:


  • northernladuk
    replied
    Originally posted by ladymuck View Post
    That would set my alarm bells ringing. I'd want to know exactly what "adequate performance" meant and how it was evidenced.

    That sort of thing totally drives the wrong behaviour as you'd spend more time collecting proof than delivering value to the client.
    Absolutely. If they want to withhold it I'd want to see very clear definitions of what the criteria is for it to be released. Very clear and tangible activities should be listed so they can be assessed and if need be argued. A general 20% and we'll pay you at the end is not acceptable at all.

    Leave a comment:


  • ladymuck
    replied
    That would set my alarm bells ringing. I'd want to know exactly what "adequate performance" meant and how it was evidenced.

    That sort of thing totally drives the wrong behaviour as you'd spend more time collecting proof than delivering value to the client.

    Leave a comment:


  • eek
    replied
    Nice way to demonstrate financial risk (a minor CEST determining factor from memory) while potentially substantially increasing the consultancy's profits if the clause doesn't have clear cut success factors.

    Leave a comment:


  • Consultancy witholding 20% of each invoice in new contracts

    Just been speaking with a friend who is working for a Government department via a well known consultancy. As part of the changes in response to the IR35 private sector rollout the new contracts that have been issued have a clause whereby 20% of each invoice is witheld till the end of the contract and release upon adequate performance. Has anyone else encountered this?

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