Reply to: Agencies and Late Payment Penalties

[TheFaQQer]

Should have said COGS - consignment of geriatric shoe-makers.

You are Sir Humphrey Appleby / Bernard Woolley and I claim my £5.

[NotAllThere]

Should have said COGS - consignment of geriatric shoe-makers.

[TheFaQQer]

Round objects. There is nothing to stop a company having different terms and conditions with every supplier. It's just more convenient not to.

Who is Round, and to what does he object?

[NotAllThere]

The most important issue in terms of one off requests is that we are legally bound to show conformity in what we offer to each and every supplier.

Round objects. There is nothing to stop a company having different terms and conditions with every supplier. It's just more convenient not to.

[ratewhore]

Can't be bothered with agents like that. If it were me I'd move on. I appreciate though that many may not have that luxury.

[Janner]

Does anyone have experience of negotiating payment schedules with pimps?

For information one of the other contractors has just tried to negotiate with the Agency and got this response.
'Although I am appreciative of your request in terms of our clause 11.6, I am afraid it is not something that we could consider altering at this stage.

Owing to the complex and confusing legislation of the late payment of commercial debts act, this is not a decision that can be taken lightly for a number of reassons :

We firstly need to ensure that our clause is the same as or close to that offered by our own debtors, and thereafter need to ensure that the rate is set as a deterrent against us making late payment to our suppliers.

The most important issue in terms of one off requests is that we are legally bound to show conformity in what we offer to each and every supplier.

Therefore we would need to review every contract we have in place, and not make one off changes to our standard terms of business, in order not to undermine the validity of our legal position."

[Janner]

Not true. Find another contract.

Are they constantly paying the invoice beyond the contractually agreed terms? If so, then find another gig and take the necessary steps to get any outstanding amounts paid.

If they generally pay on time, I would suggest you are over-analysing the situation.

50% of their payments have been late. We raised the issue to the client that the constant chasing of the Agency was a distraction which we could do without. (The Agency have a preferred supplier status).
The Client informed the Agency that they were not happy, especially when it turned out that of the 20 consultants provided by the Agency at least 7 others have also been paid late on more than one occasion.
The Agency have now promised to try and pay on time in future.
I now invoice weekly to reduce the risk.

[NotAllThere]

My understanding is that the legislation doesn't allow a big co to bully a small co into accepting unfair terms. But 30 days of extra credit, as you've been told, probably won't be see as massively unfair.

If the agency pay consistently late, then perhaps you should consider a sort of dunning process. 1st time - letter to your agent, explaining that the agency has paid late, and that you find this unacceptable, and not in the terms of your contract. 2nd time - letter to agent saying that you are severely dischuffed that this has happened again, and if it occurs one more time, you'll consider it to be a material breach of contract. 3rd time - tell them their in breach of contract and walk. Or if the client is amenable (and able), go direct. Late payment itself is a minor breach - but regular late payment may not be.

I'd also go to the payontime website and ask the question there. I did this a few years ago, and had an answer within a week.

[ratewhore]

Looks as if the only option is to check my legal cover and ask the court to decide.

Not true. Find another contract.

Are they constantly paying the invoice beyond the contractually agreed terms? If so, then find another gig and take the necessary steps to get any outstanding amounts paid.

If they generally pay on time, I would suggest you are over-analysing the situation.

[Janner]

PCG Advice

If you're a PCG member, it's probably worth ringing their legal helpline and see what they suggest - seems like this is an unfair term in the contract that any court would kick out.

Did you opt out of the agency regulations, in writing, before meeting the client? There may be some more protection you can get from being opted in.

Opted out so there is little joy there.

The Legal Helpline of the PCG's summary of the situation was that given I accepted the late payment terms in Pendragon’s contract and had not submitted/negotiated my own company terms to them (which could have stated late payment becomes due after 30 days from submission of invoice say), it is unlikely that the court would find in my favour.

The question of whether their late payment term should be void as it is not “a substantial remedy” would also be influenced by the size of the loss I have incurred through being paid late.

Looks as if the only option is to check my legal cover and ask the court to decide.

[ratewhore]

but obviously if I could reduce my LtdCo's exposure I'd rather do so.

Run a credit check against them.

[NotAllThere]

Does anyone have experience of negotiating payment schedules with pimps?
Their "standard" is weekly invoicing with payment to follow after 28 days, which gives me a 5 week exposure. I think this is fairly reasonable, and it's not a deal-breaker, but obviously if I could reduce my LtdCo's exposure I'd rather do so. Anyone had any success/failure in this matter?

Yes, I've successfully negotiated to terms agreeable to me. Otherwise I won't take the work. It depends on what leverage you have.

My experience over the last 13 years, leads me to expect payment within 7 days from agencies. The justification for having high margins, is that agency acts as a factor of the debts. They get the higher margins in return for taking the higher exposure risk. I've only accepted longer payment terms when the agency margin has been low. ( Though one agency gig I did had a fixed-by-the-client margin of 7%, and payment the day after invoicing! ).

[Sockpuppet]

Go on, I'll bite - what's the best thing about them?

Legal expense cover?

[Sockpuppet]

My Agy pays within 3 working days which I am happy about.

For direct work its 30 days from invoice.

[ratewhore]

Does anyone have experience of negotiating payment schedules with pimps?
Their "standard" is weekly invoicing with payment to follow after 28 days, which gives me a 5 week exposure. I think this is fairly reasonable, and it's not a deal-breaker, but obviously if I could reduce my LtdCo's exposure I'd rather do so. Anyone had any success/failure in this matter?

Bearing in mind it's a B2B relationship, I always take the view that anything less than 30 days is a bonus. I have made amendments to payment terms in a contract, adding a statement 'subject to maximum payment terms of 30 days'. That is only where the payment clauses are over-complicated (i.e. invoice in by the 3rd friday kicks off payment on the following thursday blah blah blah).

Elan are farting around paying me right now and have missed 2 payment runs, however, bearing in mind they are still within the 30 day terms, I'm not creating a fuss about it.