Direct Contracting

[Iveco]

Dear All,

I am after your feedback.

Firstly I'm from a permanent IT recruiter and we're thinking about offering the following service to supplement our current offering. Over the years we've stayed away from the contract market due to the back office logistics of it all but we're thinking about offering the following to our clients.

Charging the client a one off fee of £1000 and then they're free to employ the contractor on a direct basis. For contracts of 2 months+ this will work out considerably cheaper than paying the agency margin.

Benefit to client - Cost savings.
Benefit to contractor - Transparent fee structure which will not impact on your rate. Direct contract with end user.
Benefit to us - Keeps cash flow moving in slower times.

Any thoughts?

Thanks

Iveco

[Ardesco]

Most companies don't want to have to deal with a contractor direct which is why they get the agencies involved.

Good luck with that.

[zara_backdog]

Would you offer a credit check of the company to the Contractor?

[scotspine]

it seems, on the face of it, to be roughly what a lot of folk on here have been looking for for quite some time. a fairer system of intermediary where the agency doesn't continue to cream off margins for little or no subsequent work done. ardesco's point is worth considering but i think it's a case of it will suit some of your clients and not others. maybe you should do some research with them also?

as an aside: if 'they' are your clients, what term do you use for us?

[lambrini_socialist]

as an aside: if 'they' are your clients, what term do you use for us?

plankton?

[expat]

I'd like it. The agency performs one service, and gets one payment.

I can see problems with the client, though: they probably like to think that they are buying an ongoing service.

But from my point of view, I like it. And I'll do my own credit checks.

[Grinder]

I'd go with an unbundled offering - a 'finders' or 'introduction' fee, then a smaller regular % of billings to cover administration and (if desired-) payment by return. And for some of the prima donnas on here 'treat me like a king' fund.

In my experience, clients do like to receive one invoice from each agency if they have 20, 30 or 300 contractors.

[Iveco]

Thanks for the initial feedback.

With regards to the credit check, yes this is something we could offer.

We have been doing something similar recently on a lesser scale and a lot of companies are able to and happy to employ on a direct basis. Based on a 6 month contract £300 per day and a 15% margin my Maths tells me it's over £6000 to have an agency pay the contractor.

Now providing they've got their own payroll department then I'd say it makes a lot of sense to take them on Direct and save £5k.

[Brussels Slumdog]

[QUOTE=Iveco;812857]Dear All,

I am after your feedback.

Charging the client a one off fee of £1000 and then they're free to employ the contractor on a direct basis. For contracts of 2 months+ this will work out considerably cheaper than paying the agency margin.

Benefit to client - Cost savings.
Benefit to contractor - Transparent fee structure which will not impact on your rate. Direct contract with end user.
Benefit to us - Keeps cash flow moving in slower times.


1 One of the reasons that companies use contractors is to reduce head count
and agency workers do not count as head count.
2 Companies usually ignore contract terms like pay conditions notice period
example BT has asked contractors to reduce their rate or leave.
They could not do that if the contractors were on their books.
3 I always use the same payroll company when I work in UK which means one
tax certificate at the end of the year and not 5 certificates from 5 employers.
4 How would I claim travel expenses in London if my home was in Birmingham
and I am not an MP. Would the direct employer pay my expenses.
5 How would you handle european applicants

Advice

Be the best agent in town offer me say £400 day and the client £550 for 3 months then increase me to £425 and reduce the client to £525 ,after 6 months increase me to £450 and reduce the client to £490 .
The longer the company keeps me the cheaper it becomes for them, I will become more motivated and try for an extension.

[Iveco]

Firstly, to answer your question, there is nothing at all to stop you from going through an Umbrella Company which would get around the headcount issue and indeed the claiming back of expenses. That way the Umbrella Company will have done the initial credit checks and will enable you to have one tax certificate.

We'd handle European applications in exactly the same way as any other application. Not sure what you mean here?