Advice on non-paying client

[JonRB]

I have a bit of a problem with a non-paying client. Or, rather, a client who won't pay the agency I used as an intermediary and they in turn are dragging their feet over my invoice(s).

The thing is, there is absolutely nothing in the contract between my company and the agency (including their T&C of Business) that stipulates that they can delay payment if the client doesn't pay them.

There are two invoices outstanding. One is for services provided and is cast-iron. The other invoice is a result of a verbal agreement between myself, the client and the agency that the client would settle a month's fees in lieu of notice to terminate the contract.

Both invoices are now overdue the agreed 10 days from date of invoice. The first almost 30 days overdue and the second (the in-lieu one) by >10 days.

I don't doubt that the agency will pay these invoices as soon as the client pays them, but given that another contractor colleague who was on a direct contract with the client had to sue the client to get his outstanding invoices paid, I'm not holding my breath over that. And another contractor colleague who was also through the same agency as me is also in the same boat.

I've had a word with my solicitor (hopefully non-billable) and he suggests as a first step I write a letter clarifying the position and threatening legal action or if they are unable to pay, a Winding Up Petition. However, I understand that I can only issue a petition for undisputed debts, so I'm guessing that I may be on a sticky wicket re: the second invoice (the in-lieu one).

Who should I address the letter to? Should I address it to the recruitment consultant I've been dealing with, the person in accounts I deal with, or should I find out the name of one of the director's of the agency and send it to them?

Also, does anyone have an example letter with the correct wording / threats? I'm by no means am amateur at writing well-crafted letters but it would save me some time and effort if someone has something I could crib.

Thanks in advance
Jon

>> Edited by JonRB on Wednesday 10th August 15:36

>> Edited by JonRB on Wednesday 10th August 15:39

[Hughesie2]

JonRB said:

The thing is, there is absolutely nothing in the contract between my company and the agency (including their T&C of Business) that stipulates that they can delay payment if the client doesn't pay them.

EAA (employment agencies act) stipulates that an agency cannot withold payment with an appropriately signed Timesheet (i'm guessing you still got a timesheet signed ??)

This should be your 1st piint of call - speak to your agent and find out why they arewitholding payment - then go to the MD...

give em 7 days and if its not paid go legal on their asses...

[JonRB]

Hughesie2 said:

EAA (employment agencies act) stipulates that an agency cannot withold payment with an appropriately signed Timesheet (i'm guessing you still got a timesheet signed ??)

I have for the 1st invoice, which is the one I view as cast-iron.
Unfortunately I haven't for the 2nd one (the in-lieu)

Hughesie2 said:

speak to your agent and find out why they arewitholding payment

Yes, well that's the trick, isn't it? So far all I've got is the runaround and one email reply that says "your emails are not falling on deaf ears - I will phone you shortly" (which never happened).

I do have an email from their accounts dept saying that payment has been delayed due to the client not paying them, which is a pretty damning admission, I reckon.

Edit: Does the EAA apply in this case? This is a business-to-business relationship between two Limited Companies (my own and the agency). It is not a worker-agency relationship.

>> Edited by JonRB on Wednesday 10th August 15:46

[mmm-five]

So is your contract with the agency, or the client?

If the former, you need to chase them for payment as per their terms & conditions - pointing out that you were contracted to them, not to the client, and as such their cashflow problem should not become yours.

Unfortunately I'm in a similar position except that my contract is direct with a client who is paying me very slowly - i.e. should be getting paid within 28 days of invoice, which is weekly. However I am only getting paid 4-week lump sums every 6 weeks or so. But as I am still working for them, it would not be wise to push it too hard yet.

>> Edited by mmm-five on Wednesday 10th August 16:02

[Hughesie2]

JonRB said:

I do have an email from their accounts dept saying that payment has been delayed due to the client not paying them, which is a pretty damning admission, I reckon.

i agree, ask them to politely point out where in the T's and C's it says they can delay payment due to non payment of their invoices...

then very politely explain that you would like that invoice paid as per your T's and C's/Contract with them...

JonRB said:

Edit: Does the EAA apply in this case? This is a business-to-business relationship between two Limited Companies (my own and the agency). It is not a worker-agency relationship. >> Edited by JonRB on Wednesday 10th August 15:46

probaly not, you could threaten your own Ltd Co though

I would strongly suggest getting a signed t-sheet for the 2nd invoice pronto otherwise i can see you getting into deeper do do with them, along the lines of them invoicing the client with your invoice and not paying you as you didnt get a signed Tsheet for the work !!


Unscrupulous bunch some RC's !

[JonRB]

mmm-five said:

So is your contract with the agency, or the client?

The former

mmm-five said:

If the former, you need to chase them for payment as per their terms & conditions - pointing out that you were contracted to them, not to the client, and as such their cashflow problem should not become yours.

Indeed, and exactly the attitude I am taking. However, they are dragging their feet terribly and it looks like I'm going to have to get legal on them.

The thing that really pisses me off, though, is that every time you have a discussion with a recruitment agent about what a bunch of parasitic leaches they are (especially discussions here on PistonHeads) they always trot out the same old line of how they take the risk for the client not paying them but that they still pay you. Oh really? Not in this case, eh?

[JonRB]

Hughesie2 said:

ask them to politely point out where in the T's and C's it says they can delay payment due to non payment of their invoices... then very politely explain that you would like that invoice paid as per your T's and C's/Contract with them...

Yep. Already done that via email. Twice.

Hughesie2 said:

I would strongly suggest getting a signed t-sheet for the 2nd invoice pronto otherwise i can see you getting into deeper do do with them, along the lines of them invoicing the client with your invoice and not paying you as you didnt get a signed Tsheet for the work !!

If the client is delaying payment to a number of suppliers including myself, they're hardly going to be willing to retrospectively sign a timesheet, especially one for work that wasn't performed.

I should have knocked up a written agreement and got a representative of the client to sign it before I walked off site. However, hindsight is a wonderful thing.

>> Edited by JonRB on Wednesday 10th August 16:20

[obiwonkeyblokey]

HI jon

I run an agency and we always pay despite clients not paying us. Our relationship is with the contractor regardless of whether the client pays us. Youre on pretty solid ground should you wish to pursue the agency.

If you want to Pm with more info, then I will be happy to help. I could probably give you the lowdown on the agency as well as credit check the end client for you and let you know if there are any likely financial problems.

[Hughesie2]

JonRB said:

Yep. Already done that via email. Twice.

What you waiting for then, go legal !!

JonRB said:

If the client is delaying payment to a number of suppliers including myself, they're hardly going to be willing to retrospectively sign a timesheet, especially one for work that wasn't performed.

The above implies you have a direct link to the Client, and not through an agency ??

Your not a supplier, your agency is, your beef should be with the agency not the client.

Whats it to be, Is your agreement is with the agency, or the client ??

The clients non payment should not affect your invoice to the agency, unless the 2nd invoice was for work not done, in which case i dont blame them for not paying the 2nd invoice, but i'm guessing that your an honest guy and did actually do the work, in which case the client should be happy to sign a timesheet for the work retrospectively...

JonRB said:

I should have knocked up a written agreement and got a representative of the client to sign it before I walked off site.

or a timesheet ??

JonRB said:

However, hindsight is a wonderful thing.

Ahh, yes it is indeed...

Without having a go at you directly Jon, and i'm happy to defend RC's on here and contractors rights, welll the good ones, it always amazes me how Contractors can go through 4 years of Uni, job after job to get experience, find a contract paying £500 a day or more and still not get a timesheet signed before they finish a job/contract...

Just my 2p with 10+ years Recruitemnt experience

[JonRB]

Hughesie2 said:

Without having a go at you directly Jon, and i'm happy to defend RC's on here and contractors rights, welll the good ones, it always amazes me how Contractors can go through 4 years of Uni, job after job to get experience, find a contract paying £500 a day or more and still not get a timesheet signed before they finish a job/contract...

You misunderstand. The client sought an early termination of the contract and, in order to discharge themselves of their contractual obligation to serve notice of termination, offered to pay the equivalent of one month's fees in lieu of the one month notice of termination. This offer was made verbally with myself, another contractor and a senior representative of the client all present in person and the recruitment consultant present in the form of a conference call.

My final day on site was the same day as termination, so it was all a bit of a rush and a small degree of shock as this has not happened before. I should have sought documentary evidence of the offer to pay a month's fees in lieu of notice of termination, but unfortunately neglected to do so.

At the moment the agency is not refusing to pay, they are merely dragging their feet.

The relationship with the client is the usual one for a contractor, ie. I have a PSC and there is a business-to-business agreement between my PSC and the agency (the agency-supplier contract). The agency have a similar agreement with the client (the agency-client contract) and I attended the client site on a regular basis in order to provide the service.

Hughesie2 said:

JonRB said: If the client is delaying payment to a number of suppliers including myself... The above implies you have a direct link to the Client, and not through an agency ??

No, I don't. However, I am in contact with an other contractor colleague who did have a direct contract with the client and he has had to sue the client directly for payment. I am also in contact with another contractor who is with the same agency as me and he too has outstanding invoices. You're right though, it was misleading to refer to myself as a supplier in the context of the client delaying payment.

Hope that clarifies the situation.

>> Edited by JonRB on Wednesday 10th August 18:02

[Hughesie2]

JonRB said:

Hope that clarifies the situation.

Need any help, holler through e-mail fella...

Apologies if i sounded curt earlier but i was just going by the facts given...

[JonRB]

Hughesie2 said:

Need any help, holler through e-mail fella...

cheers.

Hughesie2 said:

Apologies if i sounded curt earlier but i was just going by the facts given...

Not at all. My fault for leaving ambiguity in my description of the facts.

Incidentally (and this is extended to ObiWonky as well), please don't take my sweeping generalisations about agents and agencies personally. Of course I acknowledge that there are good apples in any barrel. You probably guessed I was just having a small rant.

[jeremyc]

My small bit of advice would be not to rely on email for communication in this matter.

Call your agency and speak to them. Again. And again. And again ... until they pay you.

Good luck!

[Hughesie2]

jeremyc said:

My small bit of advice would be not to rely on email for communication in this matter. Call your agency and speak to them. Again. And again. And again ... until they pay you. Good luck!

Or better still turn up and ask to see the MD/Sales Director/Finance Director in that order unannounced...

[Hughesie2]

JonRB said:

Incidentally (and this is extended to ObiWonky as well), please don't take my sweeping generalisations about agents and agencies personally.

Sorry too late, i just hope i never get to meet you in person now, i have so much pent up anger i'm liable to swing for you...

[volvos70t5]

I forget what it is called but you can apply for what is in effect the first stage in a winding-up order ESPECIALLY where there isn't a disagreement that the debt is actually owed (as in your case - at least for the first invoice).

I heard a story that the Financial Directorof a vbery large agency had to personally deliver a cheque in the pi55ing rain to a contractor because he had taken this step.

Might be worth asking in legal circles - maybe even Citizens Advice Bureau. Keep us posted.

[JonRB]

On the advice of another contractor who has had a successful outcome in similar circumstances, I used HMCS's Money Claim Online [link] which uses Northamptonshire County Court to process the claim. The court fees were £250 for my claim and this is added onto the amount claimed against the defendant, so if successful will actually cost me nothing.

I went through the standard procedure - sent a Final Demand For Payment with 7 days to pay and when they ignored it started this online claim. They've been served the notice now (according to the status on the website) and have 14 days to defend themselves. If they don't then there will be a Judgment by Default against them and presumably a Court Order to pay.

We'll have to see what happens.

Edit: The "another contractor" mentioned above is the chap on a direct contract with the client that I mentioned in an earlier post, by the way.

Also, HMCS = Her Majesty's Court Services

>> Edited by JonRB on Saturday 17th September 12:29