Reply to: Agency and IR35

[boredsenseless]

Have you looked in debt factoring companies.

They may or may not charge less than 5% I suspect that they charge more.

Whenever I take on sub-contractors to work on projects I source from my clients I always factor their invoices (via LloydsTSB). It's about 1.8% of the invoice value.

If I remember right its 85% on invoice submission and the remainder (minus their fees) when they get paid.

The only downside is you have to sign up for the duration of the contract, so its not a solution for small cashflow issues. but then the near 2% fee is much less than the agents take.

And guess what real companies factor their invoices through banks, disguised employees get paid a day rate from an agent. Tell your agent to stick that in his 'you are going to be IR35 if you don't give me some cash' pipe and smoke it!

[TheFaQQer]

I've used the agency for the last 6 months on the current gig - excellent payers, pretty big agency, etc, so I do trust them; except for their amazing skills to sprout utter tosh that every other agency seems to have as well.

Thanks for the advice on IR35....provided I put in place the right contract, I couldn't see how going direct to the client would expose any further risk.

On the 5%, I will be seeking the client to pay it; if they don't want to party on this, I've got enough cash stashed away to survive 3 months anyway.

If you've got the money to survive, then don't waste time with the agency. Unless the agency are huge and the client are tiny and may go bust before they pay you.

See if you can get the client to agree to better terms - if you've not agreed a rate yet, then add an extra 2% onto your rate, 1% discount if paid within 60 days, 2% discount if paid within 30 days. They might take you up on it, you never know.

[beermeister]

They might be offering to get better payment terms - there isn't enough info from the OP though.

If they are going to sort payment in a week, then I'd take it, if you trust the agency. If not, then I agree - they add nothing, so lose them.

I've used the agency for the last 6 months on the current gig - excellent payers, pretty big agency, etc, so I do trust them; except for their amazing skills to sprout utter tosh that every other agency seems to have as well.

Thanks for the advice on IR35....provided I put in place the right contract, I couldn't see how going direct to the client would expose any further risk.

On the 5%, I will be seeking the client to pay it; if they don't want to party on this, I've got enough cash stashed away to survive 3 months anyway.

[hugebrain]

If you take the agency route you are paying > 20% interest on the money you get three months earlier, plus you take the additional risk of the agent spending the dosh and not paying you (see Prosperity 3, Veritas theads). Why would you?

[TheFaQQer]

Ditch the agency. They are contributing nothing to the deal. If you involve one they will probably try and fetter the contract to the way of working they are used to, which is likely to be paid-for-time bum-on-seat IR35-ropey.

They might be offering to get better payment terms - there isn't enough info from the OP though.

If they are going to sort payment in a week, then I'd take it, if you trust the agency. If not, then I agree - they add nothing, so lose them.

[thunderlizard]

Ditch the agency. They are contributing nothing to the deal. If you involve one they will probably try and fetter the contract to the way of working they are used to, which is likely to be paid-for-time bum-on-seat IR35-ropey.

[Sockpuppet]

Have you looked in debt factoring companies.

They may or may not charge less than 5% I suspect that they charge more.

[rootsnall]

5% sounds very good if they are willing take the 90 day wait and pay you up front. When I was in the same situation the agents I knew would only go down to 8%. As stated make sure they remove any restrictions on going direct. I'd negotiate with the client for 30 day payment terms. Is the client a rock solid company that won't go bust, if so and they'll sign your timesheets on a weekly basis then I'd stretch the 30 days a bit but 90 days is a long time.

[TheFaQQer]

He doesn't actually say that the agency will pay without recieving funds from the client - so it could be 97 days and a 5% fee !!

True, plus if he argues that going with an agency is better from an IR35 perspective than going direct, maybe you want to avoid this particular agency!

[Bluebird]

He doesn't actually say that the agency will pay without recieving funds from the client - so it could be 97 days and a 5% fee !!

[Bright Spark]

by getting paid earlier the money could be put into a savings account
and earn interest, at 5% the agency cut looks very cheap.

[TheFaQQer]

Assuming an IR35 friendly contract (and working conditions), and a trustworthy (!) agency, I would go with the agency.

That also assumes that the 5% charge is being picked up by the client and not by you.

If you are going via the agency, then make sure that there is no restriction on you going direct at any stage.

I wouldn't work on 90 day terms, so if the agency will do it quicker than that, then it's probably worth your while to go that route.

[Qdos Contractor]

He is talking through his @rse! Firstly IR35 concerns contractor and contract, the client is not affected by it. Secondly, by going direct by using your contacts you are operating more like a business and in that respect is a better indicator of not being caught by IR35.

That's spot on. Having a direct agreement with the client is beneficial to your position and cuts out the increasing problem of dodgy agency-end client contracts. From an IR35 perspective alone it is definitely the best option.

In that situation you are often able to supply your own T&Cs, which is another plus.

[MrRobin]

He is talking through his @rse! Firstly IR35 concerns contractor and contract, the client is not affected by it. Secondly, by going direct by using your contacts you are operating more like a business and in that respect is a better indicator of not being caught by IR35.

However, for just 5%, the peace of mind that you may get from being paid on a weekly basis rather than having to wait 3 months for your next wad of cash, in my opinion would be worth it. Would they negotiate? 4%?

[Bluebird]

Scored my next gig through my own contacts and I have the choice of going direct with the client or keeping my current agency. The agent wants to charge 5% for operating a weekly payroll system (client has 90 day payment terms which is pretty crap), so I’d have to do a sell job with the client to see if they will pick up the 5% extra. The agent reckons that going direct opens up the risk of both me and/or client getting caught by IR35. Is the agent pulling his pud on this statement about IR35?

Yes, IR35 is about your contract with either the agency or client and your working practices whist at your client.

If the agent is "running a payroll" that nakes them an MSC, and your full income is subject to PAYE.