Just landed first contract - wooly payment terms?!

[jmcdglasgow]

Hi Guys,

After weeks of slightly being led around a bit by a company I had interviewed direct with, they finally came back with an offer today. They have sent a draft template copy of their standard contract for me to check over. The project was initially estimated over three months, now they are saying two months with a strong possibility of an extension for another month.

So situation is this: I've just heard through a friend that someone who worked for them before simply had his contract terminated after 3months or so and they refused to pay up the remaining outstanding monies. He got laywers involved, and letters flew back and forth, and ultimately the lawyer said it would cost more to chase the monies than what they owe. So now I'm a bit weary of their payment terms clause:

4. PAYMENT.

4.1 In consideration for the work outlined in this Agreement, the Company or related clients shall make monthly payments to the Contractor in the amount of , plus VAT if/as appropriate. Both parties may modify at any time the amounts to be paid to the Contractor , but any and all such modifications shall be in writing and shall be signed by both parties in order to be effective.

4.2 Payment shall be made 30days from the date of invoice, or as soon as reasonably practicable thereafter, for the work performed that month. Timesheets of hours worked will be submitted to the Company along with the invoice, having been signed by the prime client for the work done. Work performed for less than a full month shall be prorated accordingly. Payment shall be made by cheque or via bank transfer, or by other means as agreed to by both parties.

My concerns here are both "or as soon as reasonably practicable thereafter" and "Timesheets of hours worked will be submitted to the Company along with the invoice, having been signed by the prime client for the work done." Surely they could just not pay by saying "it's not reasonably practical"? And the "prime client" suggest someone who is not the company themselves but whoever they are working for...

Should I try to get this changed and how would I strengthen it??? Should I just demand a fixed payment schedule on set dates??

Thanks!

[TheFaQQer]

I would have it say payment was "within 30 days".

"Invoices must be accompanied by a timesheet signed by an authorized client representative" or something like that.

On the timesheet, have something like "I confirm that the total hours and expenses shown here shall be invoiced to my company at the agreed rate" so that once it's signed, they have agreed to pay it.

[KathyWoolfe]

4. PAYMENT.

4.2 Payment shall be made 30days from the date of invoice, or as soon as reasonably practicable thereafter, for the work performed that month. Timesheets of hours worked will be submitted to the Company along with the invoice, having been signed by the prime client for the work done. Work performed for less than a full month shall be prorated accordingly. Payment shall be made by cheque or via bank transfer, or by other means as agreed to by both parties.

So what would happen is this:
1. You would work the first month and invoice at the end of that month.
2. You would then be paid within the next 30 days....so you could conceivably work for 2 months without money coming in.

[chicane]

The problem with specifying contractual payment timescales when working direct with clients is that they're unlikely to pay within 30 days regardless of what you put in the contract.

Every invoice I put out to my direct clients specifies 30 day payment - in reality the payment time has ranged from 30 days to in excess of 6 months. After all, what are you going to do if they exceed 30 days - start adding interest/penalties or send the baliffs around? Whatever action you take is likely to sour your relationship with the client and persuade them to go to a supplier who's more tolerant of late payment - of which there will be many.

I imagine most agencies state 30 day payment or less in their contracts with clients, but I bet very few of those clients actually pay within 30 days - they know they have the upper hand because the agent wants their business. Just like your client knows that you want their business.

Realistically speaking, your best bet is probably to put payment terms in the contract as suggested by others, but plan for a scenario in which these are unlikely to be met.

[Cowboy Bob]

Just opt-in to the agency regulations (or rather don't opt-out). The agency has to pay you then, full stop - including whether thay've been paid by the client or not.

[chicane]

Just opt-in to the agency regulations (or rather don't opt-out). The agency has to pay you then, full stop - including whether thay've been paid by the client or not.

Can you opt-in to the regs when working direct?

[mace]

No

Agency regs are to stop agents exploiting temporary workers. Although, it would be nice to have some kind of legislation which would prevent large businesses bullying small businesses, it's not happened yet. That's all part of doing business. Pants down, adopt the position.

[TheFaQQer]

Going direct also gives you a whole new perspective on rate discussions. An agency is trying to get the most cash out of the client; going direct they are trying to pay the least amount to you.

Expect difficult rate negotiations, and slow payment terms.

[XLMonkey]

Most of the language in these clauses is b#***#ks, and was drafted by a very poor lawyer. It suggests that they do not really know what they are doing.

I suggest that you join the PCG (i know, spam) and download their standard contracts for provision of services direct to the client. Then, suggest that you use this contract instead (you can tell them that this is the industry standard for procuring small scale professional services - and you'd be right). It has things like pricing covered in a much more straightforward way.

But, with all that said - the more important question is whether you trust them to pay on time (whatever the payment terms are). If you are unhappy with their creditworthiness (based on the experience of your friend), then you might be better off telling them so and looking for work elsewhere.

And finally, your friend's experience (and legal advice) sounds slightly odd. It is dead easy to claim money from someone who owes you - provided that you have a contract and some evidence that the work was done. Use the small claim's court or money claims online and its a couple of hours effort, max.

[thunderlizard]

Definitely get to the bottom of that "prime client" malarkey. And I wouldn't have "30 days or as soon as reasonably practicable thereafter" because that could indeed mean anything. I'd rather have a definite "payment within 45 days" or even 60.