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View Full Version : Starting my first contract at the end of the month...some questions



Jeebsy
15th November 2011, 14:52
I'm starting my first contract in about a fortnight's time. I decided to go limited rather than umbrella as the admin doesn't seem too daunting if you have a good accountant and the difference in the payment calculators seemed enough to justify any additional hassle.

I registered with Nixon Williams yesterday after doing some research on here and they're on the case with incorporation. Once that's confirmed I need to get PI/PL insurance sorted (from QDOS probably which means I can also get an IR35 review) and a bank account but that's in hand.

I worked in recruitment briefly after graduating (didn't like it and wasn't very good at it) so I'm not completely wet behind the ears but there was never any need for me to get involved with the finer details. I also did some tax law at uni but I can only remember the salient points about IR35 so once I get allocated an accountant at NW I'm going to have a chat with them about salary, dividends etc and go over the details.

I don't have the contract yet, but the agency has said the payment terms are invoice after 30 days and then 45 to process payment - I had a look on here and it seems that's certainly getting towards the upper end of what's acceptable. Are the payment terms normally negotiable?

northernladuk
15th November 2011, 15:27
Generally I would say yes depending on how tough you are. If you make a mess of asking and they see right through you you will struggle. If it is pretty clear you will walk rather than accept what they offer you tend to get a change. How flexible they are is a different matter.

The ones you quote are right on the top end though and are way off the norm. I am on 30 days and comfortable with it on this gig but I wouldn't have taken it on a few others I can think of. I would most certainly have a go at pushing that one!

Jeebsy
15th November 2011, 15:52
OK, thanks. The project I'm going to work on is pretty big and there'll quite a few of us on it so I'm not sure how much me being willing to walk will spur them in to negotiating - will give it a shot though.

What factors do you consider when deciding if you'll take longer payment terms?

TheFaQQer
15th November 2011, 15:58
I don't have the contract yet, but the agency has said the payment terms are invoice after 30 days and then 45 to process payment - I had a look on here and it seems that's certainly getting towards the upper end of what's acceptable. Are the payment terms normally negotiable?

I wouldn't accept those terms.

If you are invoicing monthly, then I expect payment to be 7 days or less. If invoicing weekly, then I'll extend 30 day terms on that, but nothing longer.

I think that they are taking the p1ss, knowing you are a newbie. Tell them to shove it.

Jeebsy
15th November 2011, 17:12
The problem is that the project I'll be working on is big and there'll be at least a couple of hundred of us; ultimately I'm pretty disposable and don't expect to have much leverage. They might take a 'if you don't like it, lump it' approach.

For most of the people on this project this will be their first contract and many might not know better. The cynical side of me also wonders if it's just to encourage people to use one of the recommended umbrella companies who have better payment terms.

northernladuk
15th November 2011, 19:32
The problem is that the project I'll be working on is big and there'll be at least a couple of hundred of us; ultimately I'm pretty disposable and don't expect to have much leverage. They might take a 'if you don't like it, lump it' approach.

For most of the people on this project this will be their first contract and many might not know better. The cynical side of me also wonders if it's just to encourage people to use one of the recommended umbrella companies who have better payment terms.

Always remember that the client picked you for the role as you have skills useful to him. The agent gets you on board to save the client the hassle. The client will not tolerate agents that lose their skilled resources they need over quabbles about payment so you do hold some power. The won't be happy at all if the agent bin you over this and the client is back to square one.

The fact everone else is new might also work in your favour if you can demostrate you have a bit more about you. They may be willing to listen more to you than the other guys just moaning about what they dont know

Zippy
15th November 2011, 19:54
I wouldn't accept those terms.

If you are invoicing monthly, then I expect payment to be 7 days or less. If invoicing weekly, then I'll extend 30 day terms on that, but nothing longer.

I think that they are taking the p1ss, knowing you are a newbie. Tell them to shove it.

WTFS. They are asking for nearly three months credit, which to my mind is unacceptable. Be prepared to lose the job but remember if you accept these terms, and it went wrong, you could be working for nothing for the length of a bog-standard 3-month contract.
Seriously - keep looking.
Offer a months credit - max.

Wanderer
15th November 2011, 20:56
If you are invoicing monthly, then I expect payment to be 7 days or less. If invoicing weekly, then I'll extend 30 day terms on that, but nothing longer.
I think that they are taking the p1ss, knowing you are a newbie. Tell them to shove it.

The folks here are absolutely right. None of us would accept those payment terms from an agency.

Jeebsy, don't let them dick you around just because you are a new boy. You are a business man now, would you offer another business 10 weeks credit??? No bloody way. Go back to them and go straight for the throat, tell them you're not budging on the payment terms TheFaQQer suggests. They will scream like a stuck pig and then tell you this will have to be escalated to the finance manager for approval, come back with a counter offer but stand up to them.

I they threaten to withdraw the contract then make it clear to them that you are going to speak to the client and tell them that you would have taken the job except for the draconian payment terms. DO NOT stand for this nonsense. remember that the client wants YOU and the agency are just the middle man here.

Jeebsy
15th November 2011, 23:28
Thanks guys. I can't not take this contract unfortunately, but I'll certainly try and hardball them a bit once they send me to contract and escalate it up to a manager to see what they can do. The agency sent an email out this morning looking for more people so the project isn't fully resourced yet which could work in my favour as they won't want people dropping out in that case.

Will let you know how it goes.

TheFaQQer
16th November 2011, 09:30
Thanks guys. I can't not take this contract unfortunately, but I'll certainly try and hardball them a bit once they send me to contract and escalate it up to a manager to see what they can do. The agency sent an email out this morning looking for more people so the project isn't fully resourced yet which could work in my favour as they won't want people dropping out in that case.

Will let you know how it goes.

Best of luck with it. Have you got any contact details for someone at the client?

If the agency start messing about and tell you that they'll pull the plug on you, it's a nice position to be in to be able to say "OK, do you want me to ring XYZ and tell him/her why I'm not going to be starting, or do you?" and then listen to them frantically back peddle.

(Oh, and welcome to CUK :wave:)

Jeebsy
16th November 2011, 09:57
One of my friends is on the same project and started recently so I'll try and get a couple of manager names in anticipation of that phonecall.

Cheers - and thanks for the advice. It's good to know there's a resource like this to sound stuff out.

redgiant
16th November 2011, 10:20
One of my friends is on the same project and started recently so I'll try and get a couple of manager names in anticipation of that phonecall.

Cheers - and thanks for the advice. It's good to know there's a resource like this to sound stuff out.

Good luck!

I invoice on the last Friday of the month. Then it takes one week for the clientco to process the timesheet and make it available to the agent. Then it takes a further week for the agency to process the invoice for payment. This is pretty normal from what I have seen in my travels.

Jeebsy
24th November 2011, 16:15
As for the payment terms I can confirm that 45 days from receipt are our standard payment terms for every associate working through [Agency X] and we are unable to make any exceptions. Perhaps working through an umbrella company would be a better option for you, as I understand that [Umbrella X] pay the associates a week after receiving their 4 weekly invoice report

Cheeky. I'll push it a bit more and see what happens.

TheFaQQer
24th November 2011, 16:35
Cheeky. I'll push it a bit more and see what happens.

They won't pay on receipt of an invoice report - they'll pay on receipt of funds.

If they are only offering 45 day terms, then tell them you'll have to insist on weekly invoicing as 75 days credit is taking the piss.

Even if you were only on £200 a day, that's £15k outstanding, which would be too risky for me. Have you done a credit check on the agency - are they reputable?

The whole point of having an agency in the middle is that they factor the payments so that you get paid. If they aren't even doing this, then what purpose do they have??

Get back on the jobs boards and start looking for anything else.

Wanderer
24th November 2011, 23:26
As for the payment terms I can confirm that 45 days from receipt are our standard payment terms for every associate working through [Agency X] and we are unable to make any exceptions.

:wink Yeah, they all try that line of bulltulip.

Seriously, think about what TheFaQQer is saying. Take your daily rate and multiply it by 50. That's how much money they are going to owe you. Can you afford to lose that if they go out of business? If they are offering payment terms like that to all their contractors then you know they don't have much equity behind them so be very suspicious.

Tell them your terms are weekly invoices with payment within 30 days. They will start screaming like a stuck pig

Tell them that that's the deal and it's quite generous too, they will "escalate this to the finance director".

If they won't budge then tell them you will give the client a "courtesy call" to explain the situation and see if you can get the client to pay them a bit quicker. Oh and by the way you've had a couple of agencies asking if you'd had any interviews, do you mind if I tell them that client X is recruiting and who the contact is?

If you've done it right that will send the agency into another tantrum. :tantrum:

Don't let them mess you around. Seriously.

TheFaQQer
25th November 2011, 10:01
One other option would be to see if you can find someone who will factor the payments for you. It would mean introducing another link in the chain, and someone else taking a cut, but you would get paid quicker.

Jeebsy
25th November 2011, 10:08
Who would do that and do you know what sort of cut they'd typically take?

I emailed them back this morning to say I wouldn't be going umbrella and I wouldn't take their standard terms but they haven't come back yet. Will try and escalate it as far as possible and have a list of all the points that you guys have given should I need to argue it out with anyone. Helpfully they sent me the contact details for the client yesterday so I can also play that card if necessary.

Wanderer
25th November 2011, 21:56
Who would do that and do you know what sort of cut they'd typically take?

Factoring? The agency is supposed to do that. :laugh

I can't really see any point working through an agency and then having to factor the payments too.

TheFaQQer
25th November 2011, 22:02
Factoring? The agency is supposed to do that. :laugh

I can't really see any point working through an agency and then having to factor the payments too.

Nor can I, but if you want / need the work, can't get the agency to budge on the payment terms, then it might be better to take a cut of 6% or less and get the money sooner rather than later / never.

Wanderer
26th November 2011, 20:50
Nor can I, but if you want / need the work, can't get the agency to budge on the payment terms, then it might be better to take a cut of 6% or less and get the money sooner rather than later / never.

Fair point. I would be hard pressed to accept payment terms which are so bad that I would consider factoring the invoices though... :(