Payment Terms in Contract

[Hobosapien]

The smaller the agency the more concerned I am about the payment terms and the tighter the payment turnaround I prefer.

Regardless of size, ensure the contract terms are clear on payment schedule and when invoices should be paid by. You then have more leverage to pressure the agency and can legitimately look at 'downing tools' (after notifying the client of the problem) if the reason(s) the agency give for delayed payment (breach of contract) start to ring alarm bells. Particularly if it's not a one-off, where the risk grows about cash flow issues.

Try not to allow unpaid invoices to accumulate, particularly if invoicing monthly where you can quickly be at risk of many weeks of unpaid work.

[LondonManc]

If it's not a weekly paid contract, I do credit checks on the client and the agency and accept the risk or ask for a higher rate to mitigate the risk if I believe there is one.

I've only had one agency in banking claim that they were unable to do weekly pay runs but both they and the client were rock solid so it wasn't an issue. Pure B2B was the best rate but biggest risk - your February work wouldn't get paid until the back end of April for example.

[Glencky]

Thanks, folks, for the additional perspectives. I've not given up yet but I can see I'm going to have to i.e. I've not communicated that I've given up on this because it's still part of a wider discussion with other points outstanding, but I've mentally written it off already and know I'll lose.

I looked into the IPSE+ T&Cs - I don't think the cover is worth much in this situation because of the fact there's an overall aggregate limit of £100k. So if a large agency goes bust or fails to pay and multiple contractors are involved claiming from IPSE, that £100k is split between them meaning potentially 2/10ths of tuppence ha'penny paid to each. This is a large agency - I don't know how many of its contractors would have IPSE+ but I'd say probably a fair number. Ergo, cover not worth a lot (fine if you're using all the other IPSE+ benefits making it just an added bonus that might be useful, but probably not worth me buying IPSE+ just for that, though I'll look into all the benefits closer when I've got time and give it more consideration.)

In line with the comments on this thread, I've never had more than occasional (frustrating, but understandable) blips in payment from agencies (or indeed, clients) whatever the terms so reality is that it doesn't go wrong very often anyway, I know that. So I do have some sense of proportion!

I considered naming the agency but decided not the best idea, but do appreciate that limits people's ability to answer.

[simes]

Ditto. 18 years of monthly in arrears, with but one contract (the current one) asking me to invoice weekly.

For my part, I choose anyway to invoice monthly.

OP, Not sure it is a fight worth fighting but good luck.

[jmo21]

FWIW, all but one of my contracts, in 10 years contracting, have been monthly in arrears.

But then I've never played hard ball about it, and I've only once had multiple agencies in the chain.

I've never had any non-payment issues though either, which means I may be being naive about it, and just been lucky.

[Hobosapien]

Unless you name the agency to see if other contractors have managed a shorter payment timescale (weekly, fortnightly) then you'll have to take them on face value.

In my experience if the agency is sufficiently large they will have no problems with paying weekly and usually have a BACS run set up to streamline their process, so it's easier for them to just offer that than try to delay some contract payments, unless they are having cash flow problems or anticipate such with the other agency in the chain.

[Glencky]

Thanks for the reply and interesting re: not paid anything other than monthly in 7 years.

I'm not interested in the IR35-proofing of my contract because I choose to operate my financial affairs as if all contracts fall within IR35 (and just in case anyone wishes to pull me up on this - yes, I do know what I'm doing and why, yes I do understand the implications and no, I don't want to go through it all again - it's my informed choice to do so!)

I appreciate agents usually don't get paid quickly in these contracts but agents factoring the cash flow is one of the few genuine benefits for a contractor in going through an agency IMHO (well, you know, that and actually getting the gig in the first place).

Pick your battles of course is always good advice, and I have already let certain things slide. But this one is important to me so not letting it go yet...

I had looked at ipse+ previously and not felt it worth getting in my circumstances, however thanks for the pointer as it might be worth it for this alone. Just had a quick look but need to check the policy wording to see scenarios covered - thanks for the pointer.

[northernladuk]

Why should they? Its likely they are factoring the payments already.

[GhostofTarbera]

So I assume your contract is water tight IR35 proof already and you have ipse+ insurance incase your agent goes bust and no need to worry?

If so, accept it, I’ve not been paid weekly in 7 years, pick your battles your agent probably won’t get paid for 90 days itself

[Glencky]

Final stages of agreeing the contract with a large agency ahead of starting work with end client within days. I've just asked a different question about contract terms on the Accounting/ Legal board but this is somewhat different. It's about payment terms and how hard to push.

Background: been contracting 4 years (PM) and during that time have sometimes been direct to client and sometimes through large agencies. The first time I was through an agency I was in 'short and curlies' position, first 'proper' contract (after my actual first contract being through somebody I knew with a direct contract overseas) and with no time or inclination to negotiate, therefore I ended up signing more or less what I was given and lumping it. Payment schedule was monthly in arrears, self-billing arrangement etc too. Did not make me happy (though it must be said, it was pretty efficient, just protracted and several weeks' consultancy time exposure before getting paid, which I find uncomfortable, particularly in tandem with some of the other clauses in the contract where they could withhold payment in various circumstances.)

Spool forward and now I'm an older hand. I now negotiate everything I can on every contract, as hard as possible (obviously along the way prioritising and letting some things go where necessary on a nose/ spite/ face basis). Since that first time, I've only ever had weekly payment terms - sometimes freely offered, sometimes I had to push, but always available.

I now find myself in the position of this company seriously implying they can't support it. Not 'don't want to', not 'not prepared to' but 'can't, because we'd need to create a unique exception process just for you'.

I must say that on a point of principle I'm going to go back once again and challenge it hard, making it clear again that MyCo's payment terms are X and I won't sign up to anything else. However clearly the spectre is rising as to whether I should just let it go (on aforesaid nose/ spite/ face basis).

So my question - has anyone ever come across a major player in the market that literally CAN'T support weekly payments without an exception process (obviously we all know that they CAN pay me e.g. manually when they want, but clearly there's a difference between trying to force them to create an exception process every week just for MyCo, compared with holding out long enough, and not blinking, such that they put me into a weekly payment process they already have but just don't want to divulge). Obviously in the end it'll be about whether I have the will to walk away from the contract over this and the usual cost/ benefit decision, but I'm not quite at that stage yet and I'm trying to assess here whether they're just trying to make me blink first or whether this is genuinely going to be a massive ball-ache for them.

Extra information: unfortunately and very annoyingly, in this situation I'm contracting to one agency, that is contracting to another agency, that only then contracts to the end client (as a result of which the contract is generally a nightmare) and I'm wondering whether this chain makes the processes genuinely more difficult on their side so that aside from the usual cash flow reasons they don't want to pay me weekly, there are other reasons that make it even more of a nightmare for them.

TL: DR - is it really possible that a major player in the contract market might really be in a position where it so consistently pays monthly that it really can't easily support regular weekly invoicing without a lot of hassle?