Reply to: Agency Payment Arrears

[Hawkeye]

Finally got an answer from the Director as the agent has driven me up the wall. The answer is no. We have a turnover of £26 million and we will pay monthly with 14 days arrears or weekly with 21 days arrears and if you don't like it don't sign the contract.

Well I guess that told me then. I actually would like to give this contract a shot for the 6 month term so I gave in. Oh well.

[Not So Wise]

I have always wondered about this. It seems that a few do indeed go bust but considering there are so many of us it never seems to be that many. It may well be that they go bust in their 100s but I never get to hear about them.

Vaguely remember someone posting last week an article that said something like 28 "employment agencies" went bust in last 12 months

[DodgyAgent]

Weekly invoicing: Will allow 30 days to pay but always managed to negotiate down to 14 days or less
Monthly invoicing: Never accept more than 7 working days (bar once when I was a newbie)

The only way I would accept larger arrears timescales is if agency was taking a margin of less than 3-5% because otherwise they are really getting money for nothing (and even then I would probably raise my rate to cover the risk)

After a painful lesson 10 years ago (that once I mentioned above that I did not negotiate down) I put in place for myself a rule that if agency is late on any timescale by over 7 days I down tools after explaining to client why, only had to do that twice and funny enough each time money magically appeared in my account same day

Always make sure payment timescales are in contract, cannot count amount of times I have see people burned by contract's that have massive timescales when contractor was promised verbally by agent that payment would be received in fraction of time, only to have agency suddenly change to keeping to letter of contract a few months later.

Agencies can and do go bust pretty regularly, if you are going to accept huge exposure to agencies raise your rates accordingly.

I have always wondered about this. It seems that a few do indeed go bust but considering there are so many of us it never seems to be that many. It may well be that they go bust in their 100s but I never get to hear about them.

[Not So Wise]

Weekly invoicing: Will allow 30 days to pay but always managed to negotiate down to 14 days or less
Monthly invoicing: Never accept more than 7 working days (bar once when I was a newbie)

The only way I would accept larger arrears timescales is if agency was taking a margin of less than 3-5% because otherwise they are really getting money for nothing (and even then I would probably raise my rate to cover the risk)

After a painful lesson 10 years ago (that once I mentioned above that I did not negotiate down) I put in place for myself a rule that if agency is late on any timescale by over 7 days I down tools after explaining to client why, only had to do that twice and funny enough each time money magically appeared in my account same day

Always make sure payment timescales are in contract, cannot count amount of times I have see people burned by contract's that have massive timescales when contractor was promised verbally by agent that payment would be received in fraction of time, only to have agency suddenly change to keeping to letter of contract a few months later.

Agencies can and do go bust pretty regularly, if you are going to accept huge exposure to agencies raise your rates accordingly.

[Hawkeye]

OMG what a nightmare. My situation sounds a dream in comparison to that. Am still waiting to hear from the agent.

[Support Monkey]

Just been through this tulip so feeling you pain Hawkeye

I won't go into the details but current year long contract changed so i am supplying to an agency who supply to another agency who supply to end client who supply to outsourced client, (great from IR35 point of view)

Anyways my agency calls me and says new contract is pay on pay ??? WTF, they will pay me when they have been paid from second agency (30 days) who in turn will only pay when they have been paid by outsource Co (30 days) so we potentially could have been looking at between 60 and 90 days before payment.

It looked to me like i was taking all the risk so i politely told my agency it was up to him if he want to accept the payment terms from the second agency, my deal with him was 30 days so i expected payment in this time, (have since put this on my invoices, yes should have been on there sooner)
Luckily end client very happy and did not want the boat rocking so put the pressure on and we got it sorted back to normal terms.

Point being contract monthly rolling so i could have been long gone before seeing any money, i know we are in business so have to accept terms offered however after this episode i shall be negotiating payment terms and getting it set in concrete on the contract

[Hawkeye]

If you're interested, I can probably provide you with a second tier arrangement to reduce the risk? It's going to cost you or the agent or the client I guess, about 4% extra daily, but assuming I can get the company through a credit check, we pay weekly, with a couple of days processing time. The business is FTSE 100, so I guess it's easier for us to take this risk.

Obviously I know it sounds a little cheeky, and that its not ideal - just so you know I don't make any money off of it - thats just the cost they make us charge! It might just give you some peace of mind though If it's of use, let me know.

Thank you but no that's ok.

[The Agents View]

If you're interested, I can probably provide you with a second tier arrangement to reduce the risk? It's going to cost you or the agent or the client I guess, about 4% extra daily, but assuming I can get the company through a credit check, we pay weekly, with a couple of days processing time. The business is FTSE 100, so I guess it's easier for us to take this risk.

Obviously I know it sounds a little cheeky, and that its not ideal - just so you know I don't make any money off of it - thats just the cost they make us charge! It might just give you some peace of mind though If it's of use, let me know.

[norrahe]

sounds like a certain agency in moorgate.

Nope, "agency" set up by ex contractor, only running a year and only have about 5 people on their books (all at the same clientco).

They managed to get it down to 30 days before I left

[slickcontractor]

They are normally amenable.

My last contract was monthly with 45 days, they didn't budge.

sounds like a certain agency in moorgate.

[Hawkeye]

45 days! That is crazy!

[norrahe]

Harsh. Spoke to her before the last few posts.

She is going to speak to accounts about reducing it and will let me know. Fingers crossed.

They are normally amenable.

My last contract was monthly with 45 days, they didn't budge.

[Hawkeye]

Harsh. Spoke to her before the last few posts.

She is going to speak to accounts about reducing it and will let me know. Fingers crossed.

[Menelaus]

One of the methods of focussing the minds here - that might certainly focus minds - is to tell them that your rate is based on being paid in n days: they're welcome to pay you in n days +n but if they do then your rate increases by a proportional amount.

If you tell them that if they want you they'll have to reduce their margin to get you to share the risk then they're more likely to be amenable to it. The alternate would be if they then said "OK we'll pay you in two days" - you might be bounced into a minor pay rate reduction.

[Drewster]

I need to snap out of it and just go for it. I think she knows exactly where I am coming from on this. Just trying to reduce my risk slightly.

I am certain she knows exactly where you are coming from.... she wants you to bear the risk - end of. What she wants and what she is prepared to settle on is very different.

You "want" to be paid instantly with no risk at all........ but you won't get it
They "want" you to take all the risk and only pay you after they have been paid (and taken their cut, plus any interest they can squeeze)....

Its just risk balancing and negotiation..... good luck