Reply to: Changed payment terms

[tranceporter]

Don't take any tulip from them. Write back and say that after careful consideration, yourCo has decided to reject the new payment terms and payments must be made according to the previously agreed contractual terms. If payments are not made according to the agreed terms then the agency will become liable for interest and penalties under the Late Payment of Commercial Debts (Interest) Act.

All this about a different system is a smoke screen. The agency has cashflow problems and they want to put the risk onto you. I'd also get agency failure insurance - consider joining the PCG as they provide cover for this.

Extending up to 8 weeks worth of credit to an agency is just not going to happen in my books....

Good shout about PCG!

[Wanderer]

As per current payment terms, I am supposed to raise invoice on the first friday of the new month for the previous month, and get paid on the next friday, which is excellent.

Don't take any tulip from them. Write back and say that after careful consideration, yourCo has decided to reject the new payment terms and payments must be made according to the previously agreed contractual terms. If payments are not made according to the agreed terms then the agency will become liable for interest and penalties under the Late Payment of Commercial Debts (Interest) Act.

All this about a different system is a smoke screen. The agency has cashflow problems and they want to put the risk onto you. I'd also get agency failure insurance - consider joining the PCG as they provide cover for this.

Extending up to 8 weeks worth of credit to an agency is just not going to happen in my books....

[TheFaQQer]

That didn't answer squat. It's a weaselly list of his problems (apparently problems of success), with a plea that he is trying to dump his problems on you in a "fair" way. Rubbish.

They didn't have to "find a suitable balance for our contractors", they already had one, i.e. what was in the contract.

"I believe settling at 28 days is fair," he says. I don't. What was agreed, is fair.

"I agree that might not be a benefit to you" Nice of him to agree with that, shame it doesn't have any effect on him.

+1

If they have a great new timesheeting and invoicing system, then it should allow decent invoicing and timesheeting. Trying to change payment terms to your detriment and against the contract isn't on.

[tranceporter]

Have you had any problem with this client at all in the past or heard anything detrimental? I have been on 30 days for 2 consultancies in a row and I cannot remember one day they were late in all that time. Might be worth doing a bit of digging about the agency to see what the risk is before throwing teddy out of the cot IMO.

Sorry, just read this. For some reason I seem to skip your responses because they are too detailed. Sorry
Nope, the current client is good. In fact, the was asking if he could do anything to help me Which is one of the reasons I want to hold on to this contract if possible.

[deanosity]

I had similar changes imposed on me (almost word for word) from an agency last year, It transpired that they had very serious cash flow issues.

I personally would be a little concerned.

[psychocandy]

WHS+1.

Surely they can't change payment terms in a contract just because its convenient to them? They're payment terms with their clients is not any of your business anyway. Its between the two parties....

[Ignis Fatuus]

Well, I e-mailed their finance director, questioning about their choice of payment date (30th), and this is the response I get:

Thank you for your e-mail.

I appreciate your comments and understand why you have communicated this to me.

We have chosen the 30th of the month as this provides payment terms of a maximum of 28 days in any calendar month, depending when the first two working days fall in the month.

As our business has grown the payment terms we have with our clients has changed somewhat and with some companies we have 30 day payment terms and for others we have over 90 day payment terms. Taking into account our spread of clients and different payment terms I had to find a suitable balance for our contractors. Whilst offering payment terms of 60 days would not be attractive or right from our contractor perspective but I believe settling at 28 days is fair. I agree that might not be a benefit to you.

I hope to have answered your concerns.

Truth be told, I think they are simply trying to recover the money they have invested in the new online timesheet filling and electronic payroll service. As to whether they should recover it by paying late (and thus gaining interest on it in the meantime) is a different question altogether

That didn't answer squat. It's a weaselly list of his problems (apparently problems of success), with a plea that he is trying to dump his problems on you in a "fair" way. Rubbish.

They didn't have to "find a suitable balance for our contractors", they already had one, i.e. what was in the contract.

"I believe settling at 28 days is fair," he says. I don't. What was agreed, is fair.

"I agree that might not be a benefit to you" Nice of him to agree with that, shame it doesn't have any effect on him.

[tranceporter]

Well, I e-mailed their finance director, questioning about their choice of payment date (30th), and this is the response I get:

Thank you for your e-mail.

I appreciate your comments and understand why you have communicated this to me.

We have chosen the 30th of the month as this provides payment terms of a maximum of 28 days in any calendar month, depending when the first two working days fall in the month.

As our business has grown the payment terms we have with our clients has changed somewhat and with some companies we have 30 day payment terms and for others we have over 90 day payment terms. Taking into account our spread of clients and different payment terms I had to find a suitable balance for our contractors. Whilst offering payment terms of 60 days would not be attractive or right from our contractor perspective but I believe settling at 28 days is fair. I agree that might not be a benefit to you.

I hope to have answered your concerns.

Truth be told, I think they are simply trying to recover the money they have invested in the new online timesheet filling and electronic payroll service. As to whether they should recover it by paying late (and thus gaining interest on it in the meantime) is a different question altogether

[Bluenose]

Anyone else here had their payment terms changed mid contract?

I have been in this situation a few times now, sometimes in my favour, sometimes not. Usually there is a clause in the master contract agreement which allows them flexibility to do this.

I would say though that there is a trend to move to 28 day payment terms.

Had one agency with weekly payment runs (Eurobase) now, they were efficient !

On my current gig (not through Eurobase) they are 28 days but I told them it was not acceptable and they agreed to pay me after 15 days for the first two months in order to make sure my cashflow was ok.

Current supplier recently changed from 28 days to 15 days so, swings and roundabouts, sometimes the clause has worked in my favour.

[Ignis Fatuus]

The real-world in this case is that if they are in breach of the contract regarding late payment, you can enforce the late payment rules.

You won't be able to terminate the contract, but you will be entitled to interest and admin fees as appropriate.

WHS.

AIUI a breach of contract may have consequences but does not generally release you from the contract; a material breach of contract releases you from the contract. Contrary to what you might expect, late or non payment is not a material breach.

[TheFaQQer]

I will go with that. I was talking about the practicalities of this actually meaning anything in a real world situation.

The real-world in this case is that if they are in breach of the contract regarding late payment, you can enforce the late payment rules.

You won't be able to terminate the contract, but you will be entitled to interest and admin fees as appropriate.

[northernladuk]

Anything which breaches a contract clause which is valid is a breach of contract.

Whether it is a sufficiently egregious breach to allow for termination of the contract is a different question.

I will go with that. I was talking about the practicalities of this actually meaning anything in a real world situation.

[TheFaQQer]

Late payment isn't breach of contract. You can band it around to scare them but if they will know there is nothing you can do in this case. I am sure they have had more than enough contractors try this one to know their rights I am afraid.

Anything which breaches a contract clause which is valid is a breach of contract.

Whether it is a sufficiently egregious breach to allow for termination of the contract is a different question.

[tranceporter]

30 days and monthly timesheets is a bit harsh, also they can't unilaterlay change your terms. I presume if you miss the deadline you go another month as they run one payroll? You are building up a large exposure.

The electronic timesheet issue is a red herring. When we put it in we moved from a weekly payments run in UK and Monthly in Europe, to a daily payment run.

Thanks for that. Just hoping that the agency is not becoming cash strapped. Yup, if I miss the invoice deadline, then it rolls over to the 15th of the next month.

[Andy Hallett]

30 days and monthly timesheets is a bit harsh, also they can't unilaterlay change your terms. I presume if you miss the deadline you go another month as they run one payroll? You are building up a large exposure.

The electronic timesheet issue is a red herring. When we put it in we moved from a weekly payments run in UK and Monthly in Europe, to a daily payment run.