"Monthly Pay" - Is this normal

[malvolio]

Many agents tell us that one of the reasons for their high percentage is because of the factoring service they provide. Why shouldn't we expect this level of service? We are paying for it.

"Factoring" is nothing to do with "payment", nor anything to do with frequency. And you are not paying for it, the agency takes it out of their gross before they pay you. FWIW most agencies are capable of running a factoring service at around 5% of the average day rate, about another 5% for is sales costs and overheads, the rest is margin.

My point is that demanding uncommercial terms is not about reducing risk, it's about not being willing to act as a business, so why demand the tax benfits of being one? That's now Gay Gordon looks at it, it's why most agencies regard contractors' "businesses" as a joke and why it is increasingly difficult to defend our position as not being disguised employees.

[Cowboy Bob]

Jeez, listen to yourselves. "We're big rufty-tufty contractors, but we don't want to be treated as one, we want payment on totally uncommercial terms just like normal employees"

No wonder we get IR35 and all the other crap, is it?

Do you ask for a percentage up-front then like many other normal businesses?

Part of running a business is about minimising risk as much as possible. In our world asking for a percentage up-front is unrealistic, so many of us choose to ask the agent for fortnightly pay for similar reasons. There is nothing un-businesslike about this. Just because you personally don't run your business like that doesn't make it any less valid.

[happybloke]

Pimp rang me this morning about what seems to be an attractive gig.

Then we cut to the chase on rates and pay frequency. His agency pays monthly - actually, you submit your invoices at the end of each week ensuring the last invoice for the month arrives by the 5th day of the following month. Then you get paid around the 15th day of the following month (i.e. potentially 6 weeks after the first invoice was sent in)

Anyone else had this arrangment? Does it have its pitfalls?

If you think thats bad, I had a contract last year that was monthly pay 28 days after invoice which meant I was exposed upto 8 weeks. What made it worse was I had to chase 2 weeks before payment day to make sure the agency were starting the payment process. Even my current contract they wanted to pay me 28 days after invoice. aaah!!

[malvolio]

Never heard of late payment legislation then?

MEanwhile:

Part of running a business is about minimising risk as much as possible. In our world asking for a percentage up-front is unrealistic, so many of us choose to ask the agent for fortnightly pay for similar reasons. There is nothing un-businesslike about this. Just because you personally don't run your business like that doesn't make it any less valid.

Agreed, which is why I use contract law to enforce the payment terms in the contract, and manage my cashflow so that I don't have to panic about a payment being a week late.

OTOH, exposing my company to investigation under IR35 because I insist on having the Ts&Cs of a disguised employee, the risk of several years faffing about with the papers that result and the possibility of having to pay back several tens of thousands in back taxes and interest - well I'm sorry, but I would see as rather a bigger business risk.

But as you say, it's up to the individual how they run their affairs.

[ratewhore]

been here before

Anyways, I'm with Mal on this one, act like you're running a business. Credit checks are fine, they will tell you how much a company is good for for about £20. Then manage your risk accordingly.

[boredsenseless]

been here before

Anyways, I'm with Mal on this one, act like you're running a business. Credit checks are fine, they will tell you how much a company is good for for about £20. Then manage your risk accordingly.

Agree completely demanding weekly pay is a very 'employed' thing to do. Set up commercial payments with your clients.

Above all if you don't like the payment terms don't take the gig, its a choice not something you are forced into. You always have the upper hand you can turn it down.

[Not So Wise]

Jeez, listen to yourselves. "We're big rufty-tufty contractors, but we don't want to be treated as one, we want payment on totally uncommercial terms just like normal employees"

If I was dealing direct with the client I would have no real problem with the business standard of 30 days but when dealing with agencies I am a lot more strict in my terms, generally monthly invoice, payment within 7 days. Why? because they are charging an ongoing fee (we can argue all day who is paying the fee, contractor or client but that does not change the fact they are receive a fee) for doing no real work except to facilitate and factor payments.

I would only accept a payment delay of 6 weeks plus from an agency if they were just getting an introduction fee and that was it

Funny thing is at the moment I am a situation that is the total opposite, I prefer monthly and agency due to how the client is operating are insisting on weekly

Kyajae, if I was you, unless totally desperate I would not accept the agency terms, besides the fact that agency would be effectively getting their percentage each month for really doing absolutely nothing and having no exposure, the fact that they are even suggesting it is a very high indicator of an agency that has cash flow problems, which at best might mean even further delays in getting paid if the client is slow in paying, at worst agency could go bust mid contract leaving you high and dry and seriously out of pocket

[Bluebird]

The agency I use stipulated their terms were 28 days, I retyped their contract with 7 days sent it backt o them and said "these are my standard terms" and it was sorted.


Previously I've dealt with an agency that only ever paid ONE day a month regardless of what was on the contract and when the invoice was rec'd.

[oraclesmith]

Well I think it's pretty normal to have to work a month or more in hand before the client/EB coughs up the fees. Going direct I invoice weekly but usually have to take the normal 30 days supplier terms. The EB I'm dealing with at the moment are reputable but they have a monthly fixed payment cycle. They pay quick but have a fixed invoicing slot.

A lot of small businesses are exposed like this and they have real costs to bear if things go wrong - like the cost price of goods supplied and not paid for, whereas contractors only really lose out on their personal time and maybe a bit of travelling expenses.