Reply to: Clientco Rate Cut - Agency Commission Cut Negotiation?

[TFour]

I really don’t get all this, you sign up to a contract, cos you are happy with it. What an agent gets doesn’t matter, but if you know what it is use that to your advantage when the time is right. Otherwise don’t sign. And if you are not happy resign, bargain and / or go elsewhere. Otherwise don’t bother with all this “I feel raped” balls getting posted in the forums! No one is forcing you to work ffs.

Ultimately you are right - it comes down to accept or don't accept. The question is do you just refuse their offer and walk away, or do you try to find ways to make it more palatable through the contract chain?

[Jeebo72]

I really don’t get all this, you sign up to a contract, cos you are happy with it. What an agent gets doesn’t matter, but if you know what it is use that to your advantage when the time is right. Otherwise don’t sign. And if you are not happy resign, bargain and / or go elsewhere. Otherwise don’t bother with all this “I feel raped” balls getting posted in the forums! No one is forcing you to work ffs.

[tim123]

Clientco is a FTSE100 company with a billion quid cash in the bank. The agency have a longstanding relationship with them and are probably supplying a couple of hundred contractors to them. Where's the risk?

So was Lehman Brothers

tim

[Shimano105]

Is everyone a freakin' agent on here or what? When did it become the norm to be dictated to by the parasites?

FFS grow a pair and get every penny you can out of them instead of turning into hand-wringing, wet Liberals.

You lot make me ashamed to be a contractor!

[singhr]

If you are prepared to walk away from it just say no thanks and see if they change their stance. If you are not prepared to walk away just swallow the rate cut and slack off a bit more to 'get your own back'.

[Not So Wise]

Barely worth the effort...really? Give me £5k each a year for 20 contractors and I'll do the work the agency does. It should take me all of....3 hours a week...and that's if the payments are manual and not automated?

You are not looking properly at what "factoring" is, you just view it as billing, lets take your example

20 contractors, at 400 per day, 20 working days a month: £160,000
That's roughly the amount you will be "out of pocket" each month while you wait for client co's to pay

Now companies, in company to company billing, are notorious for paying late. 30 day min, some regularly take up to 90 days, £160,000*3 = £480,000

So roughly 480k "in play/at risk" at all times to earn 100k per year. Does it sound so good now?

As to amount of work entailed, you have just looked at things from your particular case, where you secured the contract, in most cases agencies spend a lot more time, thus money, securing a contract

At last but not least, you are one contractor in this situation, so 8k to 24k per month "in play" to earn just 400 a month? As I said, barely worth it as is, lower would not be worth the hassle/risk (and the risk is not only client going under, but also client refusing/disputing the bill)

Edit: Yes i know did not take out the 5% when calculating the "in play" totals, but it's close enough

[JoJoGabor]

General Motors? Lehmans? Woolworths? You can be surprised about who goes bust, but £1bn is a nice cushion to start off with

[TFour]

It isn't about the work, it's about the financial risk.

For that 5k per contractor you've also got to factor in the possibility of having to pay a contractor when the client doesn't pay you. If one of your clients goes bust this could be very expensive.

tim

Clientco is a FTSE100 company with a billion quid cash in the bank. The agency have a longstanding relationship with them and are probably supplying a couple of hundred contractors to them. Where's the risk?

[tim123]

Barely worth the effort...really? Give me £5k each a year for 20 contractors and I'll do the work the agency does. It should take me all of....3 hours a week...and that's if the payments are manual and not automated?
.

It isn't about the work, it's about the financial risk.

For that 5k per contractor you've also got to factor in the possibility of having to pay a contractor when the client doesn't pay you. If one of your clients goes bust this could be very expensive.

tim

[TFour]

While I love to see agents get screwed and always believe any company should do what they can to improve their profit margin honestly think you are pushing your luck here.

Agency are currently getting 5% for providing a billing and factoring service, you are already getting a very good deal, asking them to cut their rates is just you getting greedy.

5% (5k) would be barely worth the effort/risk to them as is.

If you are really that fussed about them earning more for OT you do, you could try a fixed fee service from them, aka you pay them a fixed fee (in advance) for invoicing/factoring, they pay full amount of earnings to you.

But to be honest unless they are capable of thinking of the box (aka realising they are getting paid for factoring not as "employment business") don't see them going for that

Barely worth the effort...really? Give me £5k each a year for 20 contractors and I'll do the work the agency does. It should take me all of....3 hours a week...and that's if the payments are manual and not automated?

I wouldn't call it being greedy, I would call it market conditions (clientco's rate cut) forcing me to look at the value chain and work out who is getting how much for what.....coupled with who is reliant on who.

Agreed....inability to "think out of the box" is where this relationship is deteriorating.

[TFour]

If you've such a good relationship with clientco - why are they cutting your rate?

Clientco are cutting all contractor rates, because in the current market they think they can and most contractors will swallow it (they are probably right in the short to medium term at least). It's being done at a corporate level not by the local business client contact.

[Not So Wise]

While I love to see agents get screwed and always believe any company should do what they can to improve their profit margin honestly think you are pushing your luck here.

Agency are currently getting 5% for providing a billing and factoring service, you are already getting a very good deal, asking them to cut their rates is just you getting greedy.

5% (5k) would be barely worth the effort/risk to them as is.

If you are really that fussed about them earning more for OT you do, you could try a fixed fee service from them, aka you pay them a fixed fee (in advance) for invoicing/factoring, they pay full amount of earnings to you.

But to be honest unless they are capable of thinking of the box (aka realising they are getting paid for factoring not as "employment business") don't see them going for that

[NotAllThere]

...
Why should they reduce their commission? They would have to consider whether ... they want to be in business with my company in the long term.

Probably not. Most agencies couldn't care less.

My leverage is I have a good relationship with clientco and barring a catastrophe there seems to be a lot more work to come. I am not reliant on the agency - they are reliant on me and my hard work.

Not if you're locked into using them. Then your only leverage is to quit and go and work somewhere else.

If you're not locked into them then you could try going through another agency. You might find one that'll do it for less. But you also have to consider their financial stability.

If you've such a good relationship with clientco - why are they cutting your rate?

[tim123]

After further reflection I thought about suggesting a capped rate - for 37 hours per week they make their 5% commission, for additional hours my company gets their 5% margin......but fear this will still fall on deaf ears.

Does anyone have experience of trying to negotiate similar compromises? What about changing agencies at contract renewal?

The problem is that they are factoring your money for you.

Factoring twice as much, costs them twice as much.

This idea that you have that they don't have any costs for the "overtime" money is completely false

tim

[TFour]

£5000 a year, means they're getting about £20 a day. So you're on, what, £400 a day?

Client currently paying £420. So 10% reduction means they'll pay £378 a day. So you'll be down to £360 and they're getting £18.

Not much room for manoeuvre, is it?

Capping the commission is probably something they're not set up for, so they're unlikely to think it worth it. In any case, what's your leverage? Why should they give you some of their now reduced commission?

I worked out after I posted - I wouldn't gain much on a capped commission other than moral satisfaction -a few hundred quid.

Why should they reduce their commission? They would have to consider whether they would be making decent money on the reduced commission (I'd argue they're making a killing at £100 a day for processing an invoice into a bank payment) AND whether they want to be in business with my company in the long term.

My leverage is I have a good relationship with clientco and barring a catastrophe there seems to be a lot more work to come. I am not reliant on the agency - they are reliant on me and my hard work.