Payment Terms

[dagenheis]

On a similar note - What's the market trend for majority of the Ltd co payment terms?

I have worked with agencies(not big names) which offered payment based on weekly invoices, so we received the payment every ten days. No issues at all.

I am currently negotiating a new contract and the agency stipulated 30 days payment terms. I am getting the agent to change this and accept fortnightly payments in worst case. Hope I am not being tough?

Also, how many of you have signed 40 hrs per week contract (excl lunch)? This seems to be an odd one as, again, all of previous contracts were 37.5 hours/week based on daily rate. Maybe, the agency is being cheeky to charge the client for extra 2.5 hrs provided that they bill client on hourly basis.

[Safe Collections]

one lesson for me will be that not everyone is as trustworthy as I am - just because I operate my company well, doesn't mean that the agent does too.

Always this!

[Old Greg]

Hi all,

Thank you very much for all your responses. I am starting to wonder whether I worded the "useful to him" bit badly.

My agent takes a margin of £x per day. I was trying to get him to reduce this figure, but was trying to work out what I could offer to make it work for him too. It was me making the suggestion more than the other way around.

My initial thinking was that because I didn't need the money in the 30 days that I could easily wait for 60, that him having this extra time could be good for him (in that he could bank the money and make some extra interest, and so it would be "useful to him"). The main thing I was thinking about was that I would lose some interest (but would make more back from the margin decrease).

However, seeing your reactions, I now see the exposure being a bigger thing, and a bigger risk than I first thought. I guess that being relatively new to contracting, one lesson for me will be that not everyone is as trustworthy as I am - just because I operate my company well, doesn't mean that the agent does too. Though, to be clear, I have no reason to think anything untoward.

I'll leave the margin where it is, and the payment terms where they are.

Thank you very much for your help,

GB.

Great. Have you done a credit check (as advised above) and looked on duedil.com?

[GettingBy]

Hi all,

Thank you very much for all your responses. I am starting to wonder whether I worded the "useful to him" bit badly.

My agent takes a margin of £x per day. I was trying to get him to reduce this figure, but was trying to work out what I could offer to make it work for him too. It was me making the suggestion more than the other way around.

My initial thinking was that because I didn't need the money in the 30 days that I could easily wait for 60, that him having this extra time could be good for him (in that he could bank the money and make some extra interest, and so it would be "useful to him"). The main thing I was thinking about was that I would lose some interest (but would make more back from the margin decrease).

However, seeing your reactions, I now see the exposure being a bigger thing, and a bigger risk than I first thought. I guess that being relatively new to contracting, one lesson for me will be that not everyone is as trustworthy as I am - just because I operate my company well, doesn't mean that the agent does too. Though, to be clear, I have no reason to think anything untoward.

I'll leave the margin where it is, and the payment terms where they are.

Thank you very much for your help,

GB.

[JB3000]

Hi,

I am currently operating through my own LTD company, and am working at a client with an agency in the middle. My contract is with the agency. The agency's contract is with the client.

My contract is due for extension and the client seems willing. I am discussing with my agent about reducing his margin and he is suggesting that increasing the payment terms from 30 to 60 days could be useful to him.

As I have a reasonable warchest in the LTD company and personally, I am in no hurry for the payment, so if it came after 60 days instead of 30, that wouldn't be an issue.

What sort of things am I opening myself up to?
- increased risk that the agency goes bust? i.e. the agency spends the money from the client he gets at 30 days and there's nothing left at 60 days.
- lost interest in the bank
- a small shift in the period in which I would pay taxes
- anything else?

Just want to be sure that I'm not missing something obvious, as currently it seems workable.

All thoughts welcome,

Thanks,

GB

Just because you can afford to wait 60 days doesn't mean you should. This is a huge red flag. Your agent has some serious problems.

[Safe Collections]

We would echo the above posters, changing your payment terms only helps the agent and increases your risk significantly.

Currently as invoice 1 is paid invoice 2 is falling due, if you extend to 60 day terms the first indication you have of any issue with payment will be when invoice 1 is falling due with invoice 2 still 30 days from payment and invoice 3 about to be submitted.

If the agent is a one man band by any chance?

[Scruff]

There are a number of agencies who factor their debtors and by giving them another 30 days, you will save them a fair amount of interest. If it were me, I'd decline their suggestion. To act as their bank is bad business practice.

[TheFaQQer]

If an agency told me that extending the payment terms to 60 days would be "useful" to them, I'd be looking to cut them right down as it says "cash flow problem" to me.

Do a credit check on them and see if anything shows up.

[LisaContractorUmbrella]

This would raise a small red flag IMHO - this would benefit the agency from a cash flow point of view but he would ultimately be bringing in less revenue from the contract which implies that there may be a cash flow issue with the company; an increase to 60 days does increase your company's exposure

[GettingBy]

Hi,

I am currently operating through my own LTD company, and am working at a client with an agency in the middle. My contract is with the agency. The agency's contract is with the client.

My contract is due for extension and the client seems willing. I am discussing with my agent about reducing his margin and he is suggesting that increasing the payment terms from 30 to 60 days could be useful to him.

As I have a reasonable warchest in the LTD company and personally, I am in no hurry for the payment, so if it came after 60 days instead of 30, that wouldn't be an issue.

What sort of things am I opening myself up to?
- increased risk that the agency goes bust? i.e. the agency spends the money from the client he gets at 30 days and there's nothing left at 60 days.
- lost interest in the bank
- a small shift in the period in which I would pay taxes
- anything else?

Just want to be sure that I'm not missing something obvious, as currently it seems workable.

All thoughts welcome,

Thanks,

GB