Negotiating Payment Terms

[minstrel]

I was approached directly by a client about a role based on a recommendation from a contractor friend who is already on the project.

Interview went well, I was happy with the rate and the client offered me the role. Client didn't want direct contract and asked me to go through their preferred agency. I've no problem with this and understand why clients do it for admin reasons.

However, agency is not a big player and the payment terms are monthly invoicing in arears with payment made at least 30 days later i.e. 60+ days credit for work done on 1st of month.

I'm keen to negotiate better terms as I don't like the risk of having so much cash tied up with a small time agency who could go bust. Agency have done nothing to find me for client and I would expect whatever margin client are paying to agency to cover some factoring.

I've not tried to negotiate payment terms before, so would appreciate any advice on best way to do this and what is reasonable to request.

Should I start at weekly invoicing with payment within 7 days and negotiate from there?

Is it better to request it less formally over the phone, or send a more formal email saying credit checks/insurance prohibit myCo from offering such generous payment terms? PCG Plus only covers £7,500 for agency default which is less than a months fees for me.

I want to be quite assertive, but at the same time don't want to be seen as "difficult" before contract is even signed.

Any advice or previous experience anyone can share would be much appreciated!

[SimonMac]

These seem to be almost the de facto terms at the moment, but if you don't ask you don't get, you just need to ask yourself how important a factor this is to you, would you risk walking over it, I would imagine not

[minstrel]

These seem to be almost the de facto terms at the moment, but if you don't ask you don't get, you just need to ask yourself how important a factor this is to you, would you risk walking over it, I would imagine not

Thanks SimonMac. I had a previous agency go bust a few years ago owing me 2 months money on similar payment terms, so I'm probably more aware of the risks than most

You're right I'll probably take the contract anyway. I don't mind waiting to get paid, it just frustrates me that agencies can dictate the terms and there is very little anyone can do if they decide to take all the money and run.

[Mose]

I don't think it's at all wise to be dishonest about conditions to start a negotiation. If you have reasons (insurance or anything else) why those terms are unacceptable simply say they are unworkable. I wouldn't work on terms that long, it's unfair. I'd either walk away or request they cover the factoring cost from your bank so you can factor the invoices, which is what the middleman should be doing anyway.

I'd push for 7 days terms, with 30 days worst case, unless there was a more important reason to take that contract.

[Swamp Thing]

I don't think it's at all wise to be dishonest about conditions to start a negotiation. If you have reasons (insurance or anything else) why those terms are unacceptable simply say they are unworkable. I wouldn't work on terms that long, it's unfair. I'd either walk away or request they cover the factoring cost from your bank so you can factor the invoices, which is what the middleman should be doing anyway.

I'd push for 7 days terms, with 30 days worst case, unless there was a more important reason to take that contract.

+1. Absolute worst case should be 30 days + another 5 working days to process the BACS payment into your account. There is no justification these days for being paid beyond this in our line of work.

[Ignis Fatuus]

+1. Absolute worst case should be 30 days + another 5 working days to process the BACS payment into your account. There is no justification these days for being paid beyond this in our line of work.

But that's what he's got shirley? You work October, invoice at the end of October, get paid at the end of November, that's payment 30 days.

It is invoices that get paid, not work.

[minstrel]

But that's what he's got shirley? You work October, invoice at the end of October, get paid at the end of November, that's payment 30 days.

It is invoices that get paid, not work.

Yes - that is what I've got. Only way to improve it with 30 day terms would be to invoice weekly.

[kingcook]

Client didn't want direct contract and asked me to go through their preferred agency. I've no problem with this and understand why clients do it for admin reasons.

A previous client said they'd prefer to go via an agency. I suggested that it would be cheaper for them to go direct, no agency fees to pay. They got back to me later in the day and said OK.

Have you tried selling that to them?

ALSO: Assure them that you'll be the one writing up the contract (grab a PCG one). Take the hassle off them.

[minstrel]

A previous client said they'd prefer to go via an agency. I suggested that it would be cheaper for them to go direct, no agency fees to pay. They got back to me later in the day and said OK.

Have you tried selling that to them?

ALSO: Assure them that you'll be the one writing up the contract (grab a PCG one). Take the hassle off them.

Thanks kingcook - good suggestion.

I did try suggesting that as soon as they mentioned agency involvement. The PM said if it was down to him he'd be more than happy for a direct contract. However, he said that he'd tried it before with other contractors and there was no appetite within the client purchasing/HR/accountancy machine.

[Willapp]

I would try negotiating better payment terms with the agency at first, and if they don't prove very flexible then take it up with the client - as you've said, it wasn't the agency who got you the role so in this case I don't see the harm in getting the client to apply pressure on your behalf: just say to your client contact that you're in the process of agreeing a contract with their preferred agency but the payment terms aren't satisfactory which is causing a problem.

If the client wants you there then I don't see why they wouldn't get on the phone to the agency and tell them to be more flexible, it's certainly worth a try at least.