Reply to: firing your agent

[malvolio]

You sound a little upset - relax, take it easy, maybe do a maths course.

Nah, I'll stick with the five years I spent in Management Accountancy and a calculator.

[Euro-commuter]

And if you're working out how much the agent gets for how much work, remember to include all the leads he chases that go nowhere. It's all work wor him.

[christhecontractor]

OK, don't listen. I care less whether you undersand the reality or not, but since you can't even grasp the hugely complicated point that it is the agenct who finds the work and services the client and you're only there as the hired help, there no chance in hell you will even begin to grasp cost accouintancy.

Just stop banging on about peple spending your money - not that you've done anything to get the business that pays it - and we'll agree to differ, OK?

But when you go back to the agent and tell them you want more of your money, don't be surprised if he laughs at you.

You sound a little upset - relax, take it easy, maybe do a maths course.

[malvolio]

OK, don't listen. I care less whether you undersand the reality or not, but since you can't even grasp the hugely complicated point that it is the agenct who finds the work and services the client and you're only there as the hired help, there no chance in hell you will even begin to grasp cost accouintancy.

Just stop banging on about peple spending your money - not that you've done anything to get the business that pays it - and we'll agree to differ, OK?

But when you go back to the agent and tell them you want more of your money, don't be surprised if he laughs at you.

[timh]

Yeah, I'm not convinced by the interest argument either.

I think the reason they have to skim off more than we'd like is that, yes, it's not an efficient process (which is admittedly not helped by the agents themselves) - and they have to make enough dough to weather the dry periods, just as we do.

I think the reason they skim (ha!) off as as much as they actually do is that fancy cars and cocaine habits can get really really expensive.

[christhecontractor]

Sigh... Assuming you're on £300 a day on a six month gig. Let's also ignore the umbrella for a moment sine that just clouds the picture.

You are invoicing £1500 a week and expecting payment within one week. The agency will get paid by the client after around 90 days, so they give you your money and have to support that payment from their own funds for roughly 12 weeks. Therefore they have tied up £(12*1500) = £18,000 so you can get paid. That runs for the next 12 weeks until the first bill is paid off, so there's an accumulated sum of £135k they have funded so you get paid.

That £135k makes 5% interest, or it would if they had it to invest so it costs them £(135k *0.05) = £6750 for 12 weeks or £560 a week. Or 37% of your charges. OK, that reduces down to 5% by the time you get to the end of the first 12 weeks and stays there until they get paid for your last week's work. But it is not exactly sending one invoice that costs the money, is it? And we won't go into the sales conversion ratio for the average agency, which is absolutely horrible and takes a huge amount of their operating costs.

I don't like agenices on principle and would rather not deal with them, but we will get nowhere if we don't at least try to understand the economic realities.

come on now, are you seriously trying to suggest that it would cost the agency £560 per week in lost interest on payments of £1500/ week. I think you've got your sums wrong. The most that could be outstanding at any one time would be 90/7*1500 which would amount to £19285. * 5% = £964/per year = £18.54 per week.

[timh]

In the mean time I would not involve the Agencies client as they are happy paying the money....This is between you and the Agency...

so perhaps at next renewal time you could work on the agency to reduce their percentage.

The problem here is that as soon as you ask for more money, the agency will try to claw it back from the client - and if you haven't mentioned the situation to them prior to that they may take it quite badly. I would always involve the client, just to let them know I'm trying to reduce the agency cut - not squeeze more cash out of the them.

[christhecontractor]

They aren't and they aren't doing nothing. For one thing they are paying you before they get paid, so go work out the loss of interest they suffer as a result.
And it's not your income, it's their income and you get an agreed percentage of it, not the other way round.

Get your head aroung the commercial reality and you will save yourself a lot of grief.

Remember that their cut is stated in terms of what I recieve, ie 20% of my daily rate, so therefore I would argue that the end client has agreed to pay a certain daily rate for a contractor + an agencies percentage on top of that. This makes the amount I recieve my income not the agencies income.

If it was the other way round, the end client would have said there's £700 available (for example), go get a contractor and we don't care what percentage you take.

THe fact is that most major companies these days do care how much the agency gets, and they know exactly how the money is split up between the agency and contractor.

The agency is paid 20% of what I recieve - however since they stated that they were recieving 10% of my rate, I think that's what they should get.

I understand the commercial reality, I was really asking if anyone had any experience if legally getting out of an agencies contract whilst continuing to work for the end client.

[malvolio]

Sigh... Assuming you're on £300 a day on a six month gig. Let's also ignore the umbrella for a moment sine that just clouds the picture.

You are invoicing £1500 a week and expecting payment within one week. The agency will get paid by the client after around 90 days, so they give you your money and have to support that payment from their own funds for roughly 12 weeks. Therefore they have tied up £(12*1500) = £18,000 so you can get paid. That runs for the next 12 weeks until the first bill is paid off, so there's an accumulated sum of £135k they have funded so you get paid.

That £135k makes 5% interest, or it would if they had it to invest so it costs them £(135k *0.05) = £6750 for 12 weeks or £560 a week. Or 37% of your charges. OK, that reduces down to 5% by the time you get to the end of the first 12 weeks and stays there until they get paid for your last week's work. But it is not exactly sending one invoice that costs the money, is it? And we won't go into the sales conversion ratio for the average agency, which is absolutely horrible and takes a huge amount of their operating costs.

I don't like agenices on principle and would rather not deal with them, but we will get nowhere if we don't at least try to understand the economic realities.

[christhecontractor]

As Pondlife says above, have you calculated 20% as being on top of what you get paid, or off the client's payment to the agency?

Either way, it's not really a massive amount. One agency I've had took 35% off the top for their services (that's a bit more than 50% of what I was getting ). The client was happy to pay what they were paying, I was happy with my rate to begin the contract with, and I had a negotiating tool at renewal time.

it's 20% of what I recieve, so it's actually less than that as a percentage of the entire amount. I think it is pretty massive - remember all they are doing is sending off an invoice once a month to the end client, and paying an invoice from my umbrella - probably amounts to less than 1/2 an hours work.
That equates to an hourly rate of £5000 per hour!

[Lewis]

No it isn't, the best people go with the best agents, end of discussion

I couldn't disagree more. People go for jobs not agents. "No sorry I won't go to that interview for the £600 p/day role because I've never worked through your agency before" - I doubt it. And do you search JobServe with a filter on agents? Madness !!

You're too jaded about clients. In general I get on well with mine and they are happy to get involved with the stuff you say they have no interest in. If you're interested what clients I have, I have been working for 10 years in investment banks in the City. I guess we have had different contracting experiences.

Like I said, I told my client at the time about agency dishonesty and they thanked me and got me backdated extra pay. That was a top 10 investment bank.

[meridian]

As Pondlife says above, have you calculated 20% as being on top of what you get paid, or off the client's payment to the agency?

Either way, it's not really a massive amount. One agency I've had took 35% off the top for their services (that's a bit more than 50% of what I was getting ). The client was happy to pay what they were paying, I was happy with my rate to begin the contract with, and I had a negotiating tool at renewal time.

Having said that, though, there's not much reason for an agency still to be taking more than 10% after you've been in the same contract for 2 1/2 years. They've made their commission on your introduction/placement and it's been your work, not theirs, that's kept you there through renewals. The 10% should cover their time for processing invoices and debt factoring, so perhaps at next renewal time you could work on the agency to reduce their percentage.

[dejongj]

Even if the agent is taking 100% more than they are paying me I wouldn't be bothered as I agreed and was happy with a rate that I accepted....When I found out and come renewal time I would confront the agency and want a bit more...However if it makes my company too expensive come renewal time and I loose the contract then I do get upset; which has happened to me....

In the mean time I would not involve the Agencies client as they are happy paying the money....This is between you and the Agency...

[Pondlife]

yes, you're right - I was happy with the rate, and still am, and I'm happy with the work too

Well unless it's renewal time I would say you're scuppered. You agreed to do a peice of work at a given price and should honour this IMO

I just don't like the idea of them getting a 5'th of my income for doing nothing at all.

Although I don't generally like agents the statement that they do nothing isn't true. How often do you invoice and how long do they take to pay? Compare that to the probable 90 days that they have to wait to be paid assuming no discrepancies of course.

I wouldn't have signed if I knew they were taking 20%, I normally check at the start of the contract and question it if it's more than 15%.

20% of the amount that you get (markup) equates to a margin of about 16% so there may be a difference in terminology being used.

And of course I am less likely to get a rate raise because as far as the end client is concerned they are paying a fortune for me allready.

This bit I do agree with to a certain degree when the margin is extreme as the client will have certain expectations from a £1000 a day contractor that they won't from a £250 - but for this to be the case the margin must be > 30% IMHO

I have allready talked to the client about it and they are looking at getting it reduced,

How does this help you?

but what I would really like to do is kick them out alltogether - is there any legal way to do that ?

What does your contract say? Have you opted out of the EB regs? If they have a clause about you not going direct then you're scuppered or it may be expensive to pay for their 'loss of earnings'

Just my $0.02

[malvolio]

I just don't like the idea of them getting a 5'th of my income for doing nothing at all

They aren't and they aren't doing nothing. For one thing they are paying you before they get paid, so go work out the loss of interest they suffer as a result.
And it's not your income, it's their income and you get an agreed percentage of it, not the other way round.

Get your head aroung the commercial reality and you will save yourself a lot of grief.