Reply to: Pay weekly changed to pay monthly

[Taita]

The agency is asking me if I would be ok to switch from weekly to monthly with the below reason:

The reason we asking is because there is a big lag between us invoicing the client and being paid. The time between the two is currently 8 weeks. As you can imagine, this is strain on cash flow especially as we run our small bank of contractors directly (without using a factoring company).

Also I want to mention that it's been just 6 weeks into this contract.

Do you thank they have a valid reason here? Thanks in advance.

No valid reason. They knew the terms of their client when they struck the contract with you. How can they now appeal to your better nature to bolster their weak business practice/setup?

[Andy Hallett]

Your payment terms will be defined in the contract. I'd rely on that on not agree if it were my money.

[TheFaQQer]

Good idea, however it is worth noting that the PCG agency default insurance is not retrospective so wouldn't cover the OP in this instance and it has a max claim limit of £7.5k

£10k now, up to £100k per client, up to £500k a year total across all members.

[Old Greg]

Good luck with that!

Exactly, but fun!

"Oh, there's no risk at all of us not paying you!"

"So, will you personally guarantee payment?"

" I would love to, but my doctor says I have a gammy sense of ethics so am not allowed to."

[Safe Collections]

We definitely would not recommend you agree to any change in terms now. Given the agency have admitted they have cash flow issues providing them with greater credit is the exact opposite of what you should be doing.

There's several reasons, but mainly it's to make morons like you, wait for your money, so that we can go bust in the meantime, and run off with your money - obviously.

Actually that isn't that far from the truth. We could give you the names of dozens of agencies that have "gone bust" in the past 12 months owing contractors hundreds of thousands of pounds.

The last insolvency report we received for a pimp showed the MD (of an apparently "respected" agency) withdrawing in excess of £150K from his company, in the months prior to sinking it. Assets within the agency amounted to about £500 in used PC's and furniture and the creditors list showed in excess of £200k in liabilities, more than half of that due to three contractors.

Just because you run an agency that isn't operating at the edges of legality does not mean others aren't.

You could also ask the agency Directors for personal guarantees.

Good luck with that!

Join PCG now for insurance against agency collapse (or whatever). Look on duedil.com and do a credit check.

Watch for prompt payment like a hawk and do not change terms.

Good idea, however it is worth noting that the PCG agency default insurance is not retrospective so wouldn't cover the OP in this instance and it has a max claim limit of £7.5k

[Old Greg]

Surely if agency wants a change to payment terms then basic answer is ok if you want to change from x days to y days we'd better talk about increasing the rate from £x to £y?

All other things being equal, I might agree.

But, the fact that they are asking for this and have given the explanation they have given indicates an increased likelihood of non-payment, which will also now be an increased sum owed. Theoretically, you could attempt to price that risk into your rate, but I'm not in the business of having a higher rate with a 25% chance of non-payment.

I turned down a contract earlier this year, which had a great rate, but the payment terms were sufficiently unusual for me to look into the company, and it appeared that the Directors had been skating on very thin ice legally, and had certainly wound up an associated company overseas with a pile of unpaid debts.

Sometimes the best deals you make are the ones you walk away from.

[psychocandy]

Surely if agency wants a change to payment terms then basic answer is ok if you want to change from x days to y days we'd better talk about increasing the rate from £x to £y?

[Old Greg]

You could also ask the agency Directors for personal guarantees.

[TheCyclingProgrammer]

If you even mention that you will tell the client this to the agency they freak out.

I wouldn't mention anything to the agency. I'd be letting the end client know for their own benefit - if the agency is on the verge of going under then it has negative implications for both me and the client.

[SueEllen]

I'd carry on billing as normal and I'd be making the client aware that the agency is having issues and that you hope you don't have to leave them in the lurch if the agency stopped paying yiur invoices, hint hint.

If you even mention that you will tell the client this to the agency they freak out.

[quackhandle]

Would this come under Client Risk Test in the BETs?

qh

[MyUserName]

Watch them like a hawk. When I refused they switched me to monthly anyway. I check my accounts every week and spotted it immediately and phoned them. They stalled and made excuses and apologised. In the end I demanded an email from their CFO to explain that it was impossible to give me my money and why. They faltered a bit and I ended up losing my patience and giving them an hour to sort it out or I would be forced to inform the client of how they were unable to handle teir own finances. After 58 minutes they caved.

[Old Greg]

Join PCG now for insurance against agency collapse (or whatever). Look on duedil.com and do a credit check.

Watch for prompt payment like a hawk and do not change terms.

[TheCyclingProgrammer]

The agency is asking me if I would be ok to switch from weekly to monthly with the below reason:

The reason we asking is because there is a big lag between us invoicing the client and being paid. The time between the two is currently 8 weeks. As you can imagine, this is strain on cash flow especially as we run our small bank of contractors directly (without using a factoring company).

Also I want to mention that it's been just 6 weeks into this contract.

Do you thank they have a valid reason here? Thanks in advance.

Agency is clearly having cashflow issues, which on the face of it might seem like their problem but once your invoices start going unpaid it becomes your problem too.

That said, I'd be getting back to the agency and asking them if they think extending further credit to a company that's already mentioned cashflow issues is good business sense.

I'd carry on billing as normal and I'd be making the client aware that the agency is having issues and that you hope you don't have to leave them in the lurch if the agency stopped paying yiur invoices, hint hint.

[eek]

Nope especially if the client is a blue-chip or government.

Plus they knew the payment frequency before you signed the contract.

I had an agencies wait 90 days before they got paid....

+1 That excuse is a reason to insist on reducing terms rather than giving them better terms...