Agency or direct ?

[Jakes Daddy]

Just negotiating my first contract with my client - I am currently talking direct with them.
As I am going direct, I was planning on simply using an umbrella. However, the client is asking if I will be using an agency (not that its really my call) - they already have a relationship with an agency, and in terms of setting up a new 'supplier' in their systems it is easier to use an existing one, rather than go through all the red tape of creating a new supplier (IE. the umbrella)

I'm not fussed either way - what I did say to the client was that using an agency would cost them more as the agency would want a cut - and in this case, a cut for doing absolutely nothing !

Are there advantages to me for using either route ?

[threaded]

Going direct yourself will be a cost saving for the client and you will get a better rate. I find it hard to believe it would be so hard for a client to set up a new supplier in their system that they would rather pay considerably more to an agency to save on the effort.

Using an agency should mean you get paid quicker and with more likelihood of being paid as they should do the factoring.

OK the more likelihood of being paid was actually a joke to wind up numerous members of the gathered congregation. The reality is that clients tend to have considerably more stability than any agency.

[hyperD]

I am direct with my clients. It's simply a case of setting yourself up as a supplier on their systems and making sure you get hold of a purchase order.

Agencies and umbrellas are superfluous in these transactions.

[Jakes Daddy]

I wont be setting myself up as a Ltd company, so will at least have to use the services of an umbrella.
I like the idea of an agency increasing the likelihood of being paid - my prospective manager at this client is notoriously difficult to get hold of; and I can see that getting timesheets and invoices signed off could be an issue - would an agency be of benefit wrt to this problem ? Would my timesheets be submitted to the agency (rather than the client), and would the agency pay the umbrella before they have been paid by the client ??

[thunderlizard]

If there's an opportunity to get set up as a supplier on the client's purchasing systems, however slight, go for it. Then when they decide to implement a fixed preferred supplier list, you stand some chance of being on it and being able to continue trading with them.

More generally, the fewer links in the chain, the less likelihood of any payment being delayed or disappearing.

[threaded]

If your manager is difficult to find come signing timesheets you'll find getting paid more difficult with an agency in the middle. An agency won't do anything without a signed timesheet whereas most clients will pay on a direct after checking with the manager over the 'phone.

[malvolio]

Wait a minute....

You have a guaranteed, B2B, non-IR35 opportunity to set up a working business directly with a client and be in control of your life, and you want to put a brolly in the way to tell you how to live? Get real, please.

Set up a Limited or become a Sole Trader. You don't need intermediaries, and 99% of the peope here would kill not to have to use them. And just why do you want to give away somewhere between 5% and 25% of your income to someone who adds no value? Actually, can I have it - you can work through my company for £15 an hour...

[Mordac]

Get a Ltd co for starters. If you're going direct you should be able to agree an outside-IR35 contract (substitution, no MOO etc) so why bother with a brolly? You have to be clinically insane to use a brolly in these circumstances.
Find out who the clients preferred agency is, and if they are any good (the good folk here will be able to advise) then approach them and find out how much they will charge you for factoring your invoices. About 5-7% should cover that and the paperwork. They can also handle the contract for you (to avoid you getting shafted).
Alternatively, if you know a good agency, get them to sort it out. They will handle the HR stuff with your client - as a bonus for them, they get themselves on the PSL, if it's a big client they will probably do you a much better deal. They might (in fact should) offer you a % commission on future business, after all you have provided them with a cast iron sales lead.

Bottom line, start thinking like a business. Get an agent (a good one, they do exist) to act for you when you go direct, it will help you one day. If you can find one who will pay you for the privilege, so much the better.

[eternalnomad]

you can work through my company for £15 an hour...

You can work through my Ltd. for £14.99 per hour (with excellent payment terms on production of a signed timesheet in triplicate)



EternalNomad in "acting like a highly competitive Ltd company" mode

[Paco]

I was in a similar situation once, where I had contacted the client directly and agreed a rate with them. When it came to putting my LTD into their supplier system they decided it was too much hassle and pretty much insisted I used an agency already on their system. I was happy enough as I kept the agreed rate and the agency stuck their (nominal) fee on top, so I got the benefit of the agency's factoring service at no cost to myself. And the agency contract was IR35 friendly.

I prefer to work direct if I can, but depsite what malvolio implies it is possible to stay outside IR35 even with an agent in the way. If you've already agreed the work, rate, etc. with the client you're in a strong position to negotiate any unfriendly clauses out of the agency contract, as they will basically be getting money for nothing.

I agree with everyone else about using an umbrella - why would you ever want to given the situation you are in?