Is this payment model fair for contractors?

[amartya]

Hi all,

I’d really appreciate your input on this situation I’m currently facing as a contractor:

I joined a new assignment via an agency and, before starting, the umbrella company I was asked to use confirmed that payments would be made weekly in arrears. That seemed standard and acceptable, so I went ahead and signed the agreement.

However, once the role began, I was informed by the agency that although invoices go out weekly, they won’t release any funds until 30 days after the first invoice. And even then, they only pay one week’s worth per week, meaning I’ll only receive the full first month’s earnings by the end of 60 days.

So essentially, I’m delivering work continuously for 4–5 weeks before seeing any payment, and not fully paid for that first month’s work until two months later. I’m a contractor — not a bank.

For context, the umbrella company only earns a small margin per payslip and has told me they’re tied down because the agency’s agreement states “weekly invoicing, 30-day payment terms.” I even changed umbrella companies to try to find a more flexible arrangement, but the result is the same because of the agency’s policy. The agency refuses to alter that clause.

Is this a fair setup? Is it becoming more common? Or should we be pushing back harder on this kind of arrangement?

Would really value your thoughts and whether others have faced something similar — or found ways to negotiate more realistic payment models.

Thanks in advance!

[WTFH]

You’re invoicing weekly and you’re being paid weekly, but on 30 days terms. That seems clear. It then seems that you are forgetting that you are being paid weekly, and start talk about monthly pay, and then counting back to make it seem like it’s 60 days.
You don’t get paid in advance, you get paid 30 days after invoice, and you should be invoicing after you have done work, not before

[eek]

There are some agencies that insist their preferred umbrella suppliers front the money up front so that the worker is paid a week after the timesheet is submitted but the agency doesn't pay the umbrella until 30 days is up.

Equally any umbrella fronting money up front is only 1 missed payment / bankrupt agency from going down themselves, as an umbrella did 2 years back so few umbrellas are willing to do front the money nowadays.

[b0redom]

I thought this was pretty standard. I’ve worked on 30 day payment terms for monthly billing. That meant I’d work all of (say) January, submit my invoice for January and the be paid at the end of February.

I thought that was pretty much industry standard?

[Protagoras]

It's commonplace that people employed by umbrella companies are on a pay-when-paid basis.

Having accepted an assignment and started work, it's not a great place from which to negotiate. Payment 'weekly in arrears' doesn't really firm-up the extent of arrears.

I've previously expressed the opinion on here that paying umbrella workers as if workers were 'in business' is not fair and that a person who is an employee of an umbrella company should not be providing extended credit to the supply chain, but rather be paid like any other employee.

When working via an umbrella company, I certainly don't thinking one should be exposed to credit risk. It's not even an insurable risk and in the event of non-payment up the supply chain, the umbrella's contractual liability is almost certainly limited to hours worked at minimum wage rate.

The lesson is to get acceptable payment terms agreed in the contract of employment.

Personally, I've only ever agreed up to 10 days payment terms - even for B2B contracts via my LtdCo. This is probably unusual though.

When I was working via a brolly, I never thought of myself as a 'contractor', but rather as a 'temp'. For me 'contracting' implies risk, temping carried no risk whatsoever.

[lucyclarityumbrella]

The weekly pay, 30 days in arrears is very common especially in the public sector, you could look at it this way, you will have to wait 30 days for the first weeks worth of money, but you will continue to be paid for four weeks once the assignment is over, not great but something!