A female friend of mine works as a daily freelance contractor for a consultancy. She suppliers her services to an end client who the consultancy have found, on a daily basis.
The process that the consultancy have in place is that she supplies her daily timesheets at the end of the week to the end client, they then pay the consultancy and she gets paid. The problem is the end client has a habit of losing timesheets, my friend has no ability to put pressure on the end client, and the consultancy certainly don't want to 'rock the boat' by chasing the end client or asking them to 'tighten up'. Neither does my friend want to check every time to ensure the end client has received things - its not her place to address and unreliable process/end client. Needless to say my friend doesn't receive payment if the end client messes up.
Questions
1. The consultancy has effectively outsourced the processing, my friend argues that she has obtained a signature on the timesheet, the fact that the administration is unreliable should not disadvantage her being paid. Is this contractually correct. ? She has a contractual relationship with the consultancy not the timesheet processor.
2. The fact that she doesn't get paid shouldn't be dependent on the end client paying the consultancy. Is this contractually correct?
3. If there is one lost timesheet, the consultancy withhold a week's worth of pay. Is this correct given 1 and 2 and the fact she is daily paid.
4. No one at the consultancy wants to address this for fear of upsetting the end client.
Any ideas welcome please?
Juliet LeFevre
7 Responses
Consultancy contracts
Hello Juliet,
As I understand it if your friend is working for the consultancy then her contract is with them and she must take up any payment issues with them and not the client.
If she is doing good work and is easy to sell into other clients the consultancy she is with should be willing to tackle persistent problems with a client for her.
If they are not looking after her I suggest she seeks another consultancy.
She also needs to be sure it’s the client organisation which is delaying and not the consultancy.
I worked for some years as an associate for several excellent consultancies and had no payment issues whatsoever. This was due to them having good, clear, unambiguous policies and processes and me being clear about my expectations.
With some I accepted part of the risk of payment and waited until they were paid by the client.
With others I was paid as the work was done and they took on any risk. These contracts usually attracted lower fees however.
Hope this helps.
Nick
As is
Cheers Nick,
The situation is as described. The end client is ‘at fault’ the consultancy daren’t take issue with them as they are a very large client. My friend likes working with them its just the end client’s admin is unreliable. She of course argues that that’s none of her concern.
I think its your friend who is trying to outsource processing
From your description it strikes me that your friend is relying upon the end client and her client to do her administration for her.
I would normally expect that, having obtained a signature on the timesheet (or better still two copies of the timesheet – as the end client will need one for their invoice matching – if one copy signed she should make a photocopy), she should submit the signed timesheet to her client in support of her invoice to them (retaining a further copy).
That way her invoice is fully supported and her clients invoice is also supportable. Any mislaying of the timesheet by the end client will be on their invoice reconciliation process and should not directly involve your friend.
The timing of payment to your friend will be based on her agreement with her client. I would hope that this is based on “n” days from her submission of a duly supported invoice rather than being based on end client payment but that is a point of negotiation in these contracts.
Leaving aside the cashflow side, by relying on self invoicing by her client, your friend is exposing herself to considerable taxation issues (is she actually an employee rather than a supplier – IR35).
Cheers
Thanks John,
My friend uses a limited company (for IR35). Its the consultancy that has imposed this ‘unreliable’ system on her.
She invoices the consultancy direct for payment, its just that they wont pay her unless this process is followed, she finds it falls down and they don’t seem to want to improve it. My guess is that the agency are lumping her in with normal temps, ie. employees who submit time sheets in this way.
people not process?
Hi Juliet
Your friend seems to be falling foul of a common problem, and my experience of this is that generally it is not the process that is at fault but the behaviours of the people;
“the end client has a habit of losing timesheets”
“the consultancy certainly don’t want to ‘rock the boat’ by chasing”
“Neither does my friend want to check every time”
It is all too common that folk who work for large organisations have a total “blind spot” when it comes to the downstream impact of their actions (losing timesheets) or inactions (not bothering to process timesheets quickly). As a “wage slave” the person in the accounts department is oblivoius to the fact that not processing a timesheet means someone doesn’t eat at the end of the month.
(One example I saw was no-associate-invoices-paid-at-the-pay-date; when questioned, the answer that came back was “It is VAT audit month, we are too busy with that to pay associates. Invoices will be settled in two weeks, after the audit.”)
I have found that these problems require a concerted campaign of assertiveness and, if that fails, an attack of brinksmanship, and if that fails you have to be prepared to actually down tools and go and find another client.
Sadly, managing this is one of the burdens that the self employed take on; it is the same as accepting the perception of the “wage slaves” that “associates and contractors are all paid MASSIVE daily rates (far more than the pittance I’m paid) so they can wait if necessary”
As regards the legality of questions 1, 2 and 3; it all depends on the wording of the contract your friend has with the consultancy.
Glad to get that off my chest!
Rus
PS have you noticed that Scott Adams (of Dilbert fame) always portrays the people from Accounts as Trolls?
DIY admin…
Hi Juliet
When I was doing a similar contract last year my approach was to get the time sheet signed then I faxed it to the ‘agency’.
All that needed doing was to get agreement as to who could sign said time sheet and then at the end of each week I hunted them down… got it signed and gave them a copy.
As others have said – this is just human behaviours and inefficiencies – have you considered approaching them as a consultant to help streamline the activity??
Mike
Recruitment Legislation
Under the terms of the Employment Agencies Act 2003 Conduct Regulations, a recruitment consultancy cannot withhold or threaten to withhold payement because of:
a) non payment from the client
or b) the candidates failure to produce a signed timesheet although the company may delay payement until they are satisfied the hours have been worked (which can be done with a simple phone call).
The situation is a little more complicated if your friend is working as a limited compan contractor through a third party company. If this is the case she has the option to opt of the above regulations. In fact some limited company providers do that as a matter of course.
It may be worth contacting the REC – Recruitment and Employment Confederation – the trade for the Recruitment Industry.