Reply to: Noob here, already fed up with agency and umbrella company

[nrsql]

If you are going to contract for some time I would consider a Ltd company and using it for the existing contract as well. The cost shouldn't be much more than the umbrella and give you more control but you'll have to ask the agent to change the contract. Get an accountant before you set up the company.

How long is the contract. At renewal you can negotiate the rate which can include a reduction in the agent margin - that's not really important though but, unless they have a fixed margin for the client, they will often reduce it. For first time contractors agents will sometimes take a large margin. I usually negotiate the renewal rate with the client but I'm usually working at quite a high level in he company.

The main thing you get from the agent after the contract starts is cash flow - you don't have to wait for the client to pay which can be a few months.

You should be able to cope with the odd late payment now that you've been in the contract a few months - if not you will be in trouble when it comes to an end. Often you will be paid monthly.

[Boney M]

haha actually the recruitment agency gave me the wrong address (other side of town of course), wrong telephone number and wrong name of the person i should have had the interview with. how i managed to get the gig i still don't know



lol this week she has outdone herself; i talked to her about the timesheet issue on monday, after i submitted it. nothing happened. sent her an email on tuesday 2 hours before the submission/approval deadline. still nothing. sent an email yesterday. in short the timesheet is still to be approved and tomorrow i won't get paid. i sent a nasty email tonight to the recruitment agency asking to change the approver

Anyways, thank you very much to all of you for your help and replies.

I have another quick question now: I got another small small gig from a company i interned at last year. We are talking about 2-3 hours a week (hence not much money) and I would be doing all the work from home and in my spare time, so it's just a "side gig" in addition to my 9 to 5 mon to fri job. How to deal with this? Setting up a ltd doesn't seem worth it..

My apologies, I know the topic has already been discussed and I am SURE I read a thread about a very similar situation on here a couple of weeks ago but i cannot find it so i have to ask. Thanks a lot

Good idea getting the extra approver.

Not going to win you any more favours but can you cc in the agency or her manager? If relationship is not all that with her as it is and you are unlikely to extend then I would do that.

If it is somewhere you want to stay then you will need to manage the relationship, maybe say to her that by not getting paid you will struggle to get into work or something?

[Scruff]

Maybe your "Manager" doesn't like you, or the fact that you might be earning more than she does? I have had occasions to work in similar situations and have resolved this by building a relationship with these people, or leaving? Passive, obstructive behaviour is often not worth the effort of sucking away your energies...

[MattZani]

As others have said £5 per hour isn't a bad price for someone to find you the role, present you to the client

haha actually the recruitment agency gave me the wrong address (other side of town of course), wrong telephone number and wrong name of the person i should have had the interview with. how i managed to get the gig i still don't know

PS explain to your manage why timesheet is important to you, he may not know!

lol this week she has outdone herself; i talked to her about the timesheet issue on monday, after i submitted it. nothing happened. sent her an email on tuesday 2 hours before the submission/approval deadline. still nothing. sent an email yesterday. in short the timesheet is still to be approved and tomorrow i won't get paid. i sent a nasty email tonight to the recruitment agency asking to change the approver

Anyways, thank you very much to all of you for your help and replies.

I have another quick question now: I got another small small gig from a company i interned at last year. We are talking about 2-3 hours a week (hence not much money) and I would be doing all the work from home and in my spare time, so it's just a "side gig" in addition to my 9 to 5 mon to fri job. How to deal with this? Setting up a ltd doesn't seem worth it..

My apologies, I know the topic has already been discussed and I am SURE I read a thread about a very similar situation on here a couple of weeks ago but i cannot find it so i have to ask. Thanks a lot

[Andy Hallett]

As others have said £5 per hour isn't a bad price for someone to find you the role, present you to the client, set up contracts, pay you (before they get paid) and represent you with the client.
If you think of agencies as a business expense then it's easier. It's really easy to get into the mindset of "they are taking 20% of 'my' money", much easier to think of it as 80% of something is better than 100% of nothing.

PS explain to your manage why timesheet is important to you, he may not know!

[TykeMerc]

Agencies taking a cut is a drag, but try to think of the value they actually add to the contracting relationship.

1. They will probably be submitting invoices for your work (and other peoples) every 30-60 days and getting paid 30-60 days after that. Part of their margin goes to paying the costs of paying YOU every 7 or so days from their money which they eventually get back from the client, that's typically called Factoring.

2. They do all the damn tedious sales stuff that I (and possibly you) not only suck at, but really have NO desire to do.

3. They are on the clients Preferred Supplier List (most clients have those) and most clients will NOT contract outside of their lists, it means they don't have to deal with hundreds to thousands of weekly invoices in random formats being chased by hundreds of suppliers. The clients REALLY value that bit.

4. Credit Control (extracting the cash from the clients) can be a royal pain in the nuts, I had numerous direct clients years ago, as a result of late payments and credit control hassles taking up so much of my time I struggled to have enough time to do the work that earned the fees, plus I almost went bust due to 1 very slow payer that owed me a LOT of cash.

Yes there are bad Agencies that try to take the mickey with silly margins and many of their staff are no better than failed double glazing salesmen, but with a decent one they're worth the margin.

It's NOT their responsibility to chase the client to sign the timesheets in a timely manner, it's YOURS, it's YOU that benefits from them getting signed off quickly, not them, plus to be fair the Agent represents the client and NOT you, you're a supplier to the Agent.

Umbrella companies (there are good and bad ones) charge a fee because they supply you with a service and they're in business.

Going from being Agent contracted to direct with the same client is far from trivial and the end client must be completely on board with doing that. Odds are their contract with the Agency will prevent it so it's not in their interest and that's completely ignoring any handcuff clauses in your contract with the Agency.

Incidentally many clients will not even consider hiring a contractor on a sole trader basis, it can be far too risky to them.

I agree that some of the responses in this thread have been far from helpful in tone and you did point out you're a contracting newbie (we all were once), but you will be well advised to take a good read through the newbie guides as you're falling into many of the traps which make contracting a tad more complicated than holding down a job.

[Wanderer]

So, can somebody explain to me how it works?

Is it that simple or am I missing something?

Yep, you are missing a few things and not wanting to sound rude but the sort of hassle you are getting is pretty much par for the course and if you find it unbearable then you have to have a hard think about if you are cut out to be a contractor.

1. Almost everyone here works via an umbrella (less admin/hassle) or a Limited Company (less tax but more admin/responsibility)
2. It's unlikely that end clients will engage a worker as a sole trader because the worker could do a runner without paying any tax and the client would end up liable.
3. The worker may try to claim employment rights after a certain amount of time, including redundancy, unfair dismissal etc.
4. I've not done a contract where the client didn't want timesheets that were signed off before an invoice was paid, if it weren't so then procurement would have no confirmation that the hours stated had actually been worked.
5. An agency generally won't step aside and allow you to deal directly with the client, read your contract and you will find there is a restriction that prevents you from doing this for a period of time. If you didn't sign that "opt out" they were so anxious for you to sign then that restriction is 8-12 weeks. If you did sign the opt out then it's probably a year.

Good luck!

[DirtyDog]

1. You don't pay the recruitment agent. How can you do business and sign contracts with people when you don't even know the economics of it. He gets paid by the client, takes a cut and gives some to you (or umbrella in this case).

Not quite - he gets paid by the client and gives you a share of the rate that he negotiated with the client. That's much closer to the reality in the vast majority of cases.

2. Your post shows a level of nativity

And Christmas isn't for a while yet...

naïveté

[northernladuk]

What I don't care about are posts like the one by northernladuk, which don't add anything valuable to the conversation and do not really give any help.

I am sorry you think my post didn't help. It certainly didn't spoon feed you information I admin but was intended more to give you an area to go explore and understand. I could have pointed out the exact issues with your post but you just go away none the wiser about your situation etc soo.. in detail..

I struggle seeing the point of paying the recruitment agency though. Apart from getting me the interview what else are they doing? They don't chase my client for payments, they don't chase my manager when they see it's tuesday afternoon and yet my timesheet has not been approved, they don't even reply to my emails lately...

1. You don't pay the recruitment agent. How can you do business and sign contracts with people when you don't even know the economics of it. He gets paid by the client, takes a cut and gives some to you (or umbrella in this case). It's very important to know this when it comes to negotiating rates and so on.

2. Your post shows a level of nativity or lack of effort to think, not sure which. How does any company get business? They go out and put a lot of effort in to getting clients in a very cut throat industry and work with them to gather requirements and get people on board. You pay for the time they spend doing non revenue generating work i.e. the sales work and all the other costs related to running a business. They also have a finance dept that deals with all the payments so the agent doesn't do nothing once your hired for example.

3. He is not your manager. Permies have managers. He is your client, you are in a business relationship. Luckily enough you are with an umbrella so isn't that important but when you do go limited it is essential you understand your relationship because your IR35 status (and a lot of cash) will depend on it.

Phew, fingers are tired. That is but three points you mentioned in one post. My advice to you was to go look at the whole thing and understand it because pointing things like this out won't give you the understanding you need.

[MattZani]

All of it, thanks.

I didn't quote you

And if you don't want to listen to people who are experienced long-term contractors and who do know what they're talking about, that's your loss. We aren't about to tell you something wrong just to keep you happy.

Hey wait, I started to post here because I have a lot to learn indeed, so I am all about listening to people who have something helpful to say.

For example, this

The advice to "learn the basics" is actually very important. You have absolutely no idea how much you don't know. The PCG's Guide to Freelancing (have you read it?) is 80 pages long and we aren't about to write it all out again just to keep you happy, But hey, it's your career, not ours.

I care about, and thanks very much for the link.

What I don't care about are posts like the one by northernladuk, which don't add anything valuable to the conversation and do not really give any help.

[malvolio]

What part of "noob here" didn't you understand?

All of it, thanks. Another know-nothing hero who has just had a marvellous idea and won't be told it won't work. Happens all the time.

After all those posts you should know how forums work; people ask questions and people give answers/help. Help that should be more valuable than "learn the basics, kiddo" (learn the basics...thanks for the tip, bro)
So, if you don't have anything more valuable to say, then don't feel forced to post on this thread, thanks

And if you don't want to listen to people who are experienced long-term contractors and who do know what they're talking about, that's your loss. We aren't about to tell you something wrong just to keep you happy.

The advice to "learn the basics" is actually very important. You have absolutely no idea how much you don't know. The PCG's Guide to Freelancing (have you read it?) is 80 pages long and we aren't about to write it all out again just to keep you happy, But hey, it's your career, not ours.

[DirtyDog]

I submit my timesheet to the recruitment agency and get paid by the umbrella company.

So who does the approving? If you submit a timesheet to the agency on time and in line with their rules, then why aren't they paying on time?

ANYWAY, back to the original point - you aren't going to be able to go direct. If you want to do that, then leave, set up properly and find a direct client. And good luck with that.

[MattZani]

On time?

Yes, I ALWAYS submit both timesheet and expenses on time.

Most of the times my boss doesn't approve the timesheet on time, despite me chasing her a lot.

[MattZani]

Maybe instead of sucking it up maybe an attempt to try and understand the basics of how you work and the other parties involved would be a good idea. You failed pretty miserably in your first post and this one fares no better. Contracting is about managing your company/umbrella and relationships, the work in between is incidental.

What part of "noob here" didn't you understand?

After all those posts you should know how forums work; people ask questions and people give answers/help. Help that should be more valuable than "learn the basics, kiddo" (learn the basics...thanks for the tip, bro)
So, if you don't have anything more valuable to say, then don't feel forced to post on this thread, thanks

[stek]

I submit my timesheet to the recruitment agency and get paid by the umbrella company.

On time?

You see the brolly will pay you without having been paid by the agency, will not have been paid by the client.

Think you could handle 60 day payment terms and endless chasing up?