Contract and over due payment advice
Discussion
Hi,
I'm a contractor working through an agency for a client. My contract is with the agency covering work I do for the client. I invoice the agency for the work done (day rate).
I invoiced the agency for work done last month on time as per their schedule and submitted an approved time sheet. As it was my first invoice for this contract I made sure I had supplied everything in the format the agency required as when they required it. I was assured all was in order.
Yesterday was the deadline for their payment schedule. Instead of payment I received a notice that the agency was invoking clause 4.13a of my schedule which reads...
4.13 The Contractor is required to submit invoices on a monthly basis or as set out in the Schedule. If the Contractor submits any invoice more than 3 months after the date on which the services were rendered, ReThink will consider this a breach of contract and will only pay the applicable fees following payment by the Client.
In the event of an invoice dispute, in part or whole with the Client or non-payment of a ReThink’s invoice by the Client (e.g. where the Clients states that services have not been carried out), ReThink shall either:
(a) withhold payment to the Contractor of the invoice in dispute (in part or whole);
There was no explanation with the notice. I phoned them up and confirmed that there was no irregularity with my invoice or time sheet or the timeliness of their submission. The problem was down to the fact that their client hadn't paid them on time.
My take on this is that the above clause is there to take in to account any failures in my procedure and not simply to cover them being out of pocket if their client fails to pay them on time. Am I right in this?
I believe I am and I'm pretty pissed off that a dispute between the agency and the client which isn't focussed on my performance filters straight down to me. I know this happens but am I right to feel so pissed off? It's not the fact that it's late that pisses me off it's the off hand notification with no explanation invoking a clause whose primary focus is that I have done something wrong.
As a means of expressing how pissed off I am I want to invoke clause 4.12 which reads...
4.12 The Contractor shall be entitled to charge interest on any sums due but not paid; from the date payment became due until the actual date of payment. This shall be in accordance with the Late Payment of Commercial Debts (Interest) Act 1998 as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002.
...can I do this? I know this is pissy but any amount of simply telling them they're being dicks is like water of a duck's back and I'm not ready to walk out over a stupid dispute but I still want to (beligerantly if you like) play this contract game if that's what they want to do. Can I do this and what's a reasonable level of interest?
Or shall I just put it down to experience and tell them to stick it if they do it again?
Cheers,
Mark
(spleen vented - thanks)
I'm a contractor working through an agency for a client. My contract is with the agency covering work I do for the client. I invoice the agency for the work done (day rate).
I invoiced the agency for work done last month on time as per their schedule and submitted an approved time sheet. As it was my first invoice for this contract I made sure I had supplied everything in the format the agency required as when they required it. I was assured all was in order.
Yesterday was the deadline for their payment schedule. Instead of payment I received a notice that the agency was invoking clause 4.13a of my schedule which reads...
4.13 The Contractor is required to submit invoices on a monthly basis or as set out in the Schedule. If the Contractor submits any invoice more than 3 months after the date on which the services were rendered, ReThink will consider this a breach of contract and will only pay the applicable fees following payment by the Client.
In the event of an invoice dispute, in part or whole with the Client or non-payment of a ReThink’s invoice by the Client (e.g. where the Clients states that services have not been carried out), ReThink shall either:
(a) withhold payment to the Contractor of the invoice in dispute (in part or whole);
There was no explanation with the notice. I phoned them up and confirmed that there was no irregularity with my invoice or time sheet or the timeliness of their submission. The problem was down to the fact that their client hadn't paid them on time.
My take on this is that the above clause is there to take in to account any failures in my procedure and not simply to cover them being out of pocket if their client fails to pay them on time. Am I right in this?
I believe I am and I'm pretty pissed off that a dispute between the agency and the client which isn't focussed on my performance filters straight down to me. I know this happens but am I right to feel so pissed off? It's not the fact that it's late that pisses me off it's the off hand notification with no explanation invoking a clause whose primary focus is that I have done something wrong.
As a means of expressing how pissed off I am I want to invoke clause 4.12 which reads...
4.12 The Contractor shall be entitled to charge interest on any sums due but not paid; from the date payment became due until the actual date of payment. This shall be in accordance with the Late Payment of Commercial Debts (Interest) Act 1998 as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002.
...can I do this? I know this is pissy but any amount of simply telling them they're being dicks is like water of a duck's back and I'm not ready to walk out over a stupid dispute but I still want to (beligerantly if you like) play this contract game if that's what they want to do. Can I do this and what's a reasonable level of interest?
Or shall I just put it down to experience and tell them to stick it if they do it again?
Cheers,
Mark
(spleen vented - thanks)
Edited by dern on Tuesday 16th February 09:24
So that clause means that if there is a dispute between them and the end client as to whether the work was done etc then you have to wait for your money.
I assume you read the contract before you signed it??
The end client must be disputing the quality of your work or whether it was carried out. Meanwhile you have to wait for the money.
Wouldn't surprise me if the client has no money and is kicking off about tyhe work done to delay paying you.
Edited by Soovy on Tuesday 16th February 09:35
Soovy said:
So theat clause means that if there is a dispute between them and the end client as to whether the work was done etc then you have to wait for your money.
I assume you read the contract before you signed it??
The end client must be disputing the quality of your work.
I've already confirmed with the agency and the client that this is not the case as I detailed in my post.I assume you read the contract before you signed it??
The end client must be disputing the quality of your work.
Looks like you have to wait... however, rather than start to charge interest, get out of pram etc... have a further talk with agency, try to establish when payment will/should be made. Ask whether the client is always a late payer etc.
Also any agency worth their salt will have a factoring facility. When I was in this game, we had clients paying on 90 days, contractors on 30 days... cash flow nightmare - factoring was the only way. That way all parties are kept happy.
Also any agency worth their salt will have a factoring facility. When I was in this game, we had clients paying on 90 days, contractors on 30 days... cash flow nightmare - factoring was the only way. That way all parties are kept happy.
Soovy said:
So that clause means that if there is a dispute between them and the end client as to whether the work was done etc then you have to wait for your money.
I assume you read the contract before you signed it??
The end client must be disputing the quality of your work or whether it was carried out. Meanwhile you have to wait for the money.
Wouldn't surprise me if the client has no money and is kicking off about tyhe work done to delay paying you.
Thats exactly how I read it the first time, but looking at the term and the situation more closely:I assume you read the contract before you signed it??
The end client must be disputing the quality of your work or whether it was carried out. Meanwhile you have to wait for the money.
Wouldn't surprise me if the client has no money and is kicking off about tyhe work done to delay paying you.
Edited by Soovy on Tuesday 16th February 09:35
In the event of an invoice dispute, in part or whole with the Client or non-payment of a ReThink’s invoice by the Client (e.g. where the Clients states that services have not been carried out), ReThink shall either:
(a) withhold payment to the Contractor of the invoice in dispute (in part or whole);
The situation that has occurred has been confirmed to the OP is simply a case of late payment. This term suggests a situation where a contractor has not performed their duties and payment will not be supplied for *disputed* invoices.
My advice to the OP is to reconfirm if there has been any dispute whatsoever with his work. If not, then fire off a letter stating that they are in breach of contract and charging interest.
Otherwise the agency are simply acting with all the benefits of being a 'middle man' subcontracting work and none of the risk - that being that not being paid does not mean that they can withhold payment for contractors that work for them.
I just had a chat with my manager and it's definitely nothing to do with my performance. It's down to some renegotiation between the client and agency apparently.
I don't know if the client has paid the agency yet. Presumably the client is using the payment as leverage.
I appreciate I could have negotiated out clause 4.13 (or attempted to reword it) but it genuinely never occured to me that it could be used in a dispute over the agency's invoice to the client... I though it just covered mine. Naive, obviously.
I agree that the agency has simply used this clause to pass their risk straight down to me and it's this I'm unhappy with.
I don't know if the client has paid the agency yet. Presumably the client is using the payment as leverage.
I appreciate I could have negotiated out clause 4.13 (or attempted to reword it) but it genuinely never occured to me that it could be used in a dispute over the agency's invoice to the client... I though it just covered mine. Naive, obviously.
I agree that the agency has simply used this clause to pass their risk straight down to me and it's this I'm unhappy with.
JustinP1 said:
My advice to the OP is to reconfirm if there has been any dispute whatsoever with his work. If not, then fire off a letter stating that they are in breach of contract and charging interest.
Otherwise the agency are simply acting with all the benefits of being a 'middle man' subcontracting work and none of the risk - that being that not being paid does not mean that they can withhold payment for contractors that work for them.
I agree but are they in breach?Otherwise the agency are simply acting with all the benefits of being a 'middle man' subcontracting work and none of the risk - that being that not being paid does not mean that they can withhold payment for contractors that work for them.
ysnnim: Your level headed advice is appreciated... I've been contracting now for a long time and my frustration with these cowboy agencies has risen recently with the last two agencies being particularly unprofessional
dern said:
I just had a chat with my manager and it's definitely nothing to do with my performance. It's down to some renegotiation between the client and agency apparently.
I don't know if the client has paid the agency yet. Presumably the client is using the payment as leverage.
I appreciate I could have negotiated out clause 4.13 (or attempted to reword it) but it genuinely never occured to me that it could be used in a dispute over the agency's invoice to the client... I though it just covered mine. Naive, obviously.
I agree that the agency has simply used this clause to pass their risk straight down to me and it's this I'm unhappy with.
That is how I read your contract too.I don't know if the client has paid the agency yet. Presumably the client is using the payment as leverage.
I appreciate I could have negotiated out clause 4.13 (or attempted to reword it) but it genuinely never occured to me that it could be used in a dispute over the agency's invoice to the client... I though it just covered mine. Naive, obviously.
I agree that the agency has simply used this clause to pass their risk straight down to me and it's this I'm unhappy with.
The term gives an example of when the client disputes an invoice over work not being carried out, and gives a remedy for invoice *in dispute* only.
If there is nothing wrong with your work and there has been no dispute filed as a specific reason for non-payment - which I suggest that there would be in this case, then the invoice is not in dispute and you should be paid.
anonymous said:
[redacted]
Litigation certainly isn't a good idea - that is totally right.Looking at this situation logically, I doubt very much that if the agency have such a detailed contract with contractors for a few grand each, then the contract with the client is going to be much more detailed.
I would suggest that, as a likely term would be that if a client *disputes* an invoice there is a set process they need to follow and they would have to invoke a specific clause. That would be common practice on a large contract.
The OP has been told so far that the client has been paying late, or they are trying to 'renegotiate', there is no implication that the invoice is in dispute whatsoever. Indeed, even if that were the case, the contract gives a specific example as to the context of a dispute, and that has not occurred.
IMHO, the Client for whatever reason has not paid on time. Also IMHO for whatever reason the agency has withheld payments to their contractors and wrongly IMHO invoked a clause which does not cover late or non-payment.
I would say that there is a reasonable chance that the agency has not been paid is that the client does not have the cash to pay the bill. In turn the agency are making sure that they are not left in a huge hole either.
I would not suggest warning legal action to the OP, but I would suggest speaking to them and telling them that that clause does not cover late or non-payment by the client, that there is nothing wrong with his work and ask that he either be supplied with the details of the contract in dispute - as would be fair if HIS payment is being withheld, or to simply pay him as the contract stipulates.
I've had this situation with an agency before and had to end up going the full legal route (I can't say more due to a NDA) but crucially the wording of the contract was significantly different from yours. The wording said that they could only withhold payment if the event of a missing or disputed timesheet.
Your wording gives a much broader coverage and implies they could withhold payment if the client hasn't paid them, which is what this hinges round. The wording makes it far less cut & dried, unfortunately.
It's the phrase "or non-payment of a ReThink’s invoice by the Client" that does it. That's quite a broad phrase and they could quite successfully hide behind it.
Still, look on the bright side; that's clear financial risk so is a good pointer for being outside of IR35.
Your wording gives a much broader coverage and implies they could withhold payment if the client hasn't paid them, which is what this hinges round. The wording makes it far less cut & dried, unfortunately.
It's the phrase "or non-payment of a ReThink’s invoice by the Client" that does it. That's quite a broad phrase and they could quite successfully hide behind it.
Still, look on the bright side; that's clear financial risk so is a good pointer for being outside of IR35.
Edited by JonRB on Tuesday 16th February 10:37
Thanks for the advice guys. I've been chatting to the other contractors here and it turns out we all received the same notice.
Their main concern is clause b which I didn't include earlier because it isn't immediately applicable...
or
(b) where an invoice to the Contractor has been paid which subsequently becomes the subject of non-payment by the Client, the Contractor shall raise a Credit Note and reimburse the amount of the disputed invoice (in part or whole) inclusive of VAT to ReThink. ReThink reserves the right to offset any said invoice that has not been reimbursed against future Contractor payments. Any such held payments will become due to the Contractor when any dispute has been resolved or payment from the Client is received by ReThink.
The rightly point out that had the agency paid me and therefore not simply passed the risk straight down to me and the client had subsequently not paid them, the agency could ask for the money back.
Now as I said before I assumed these clauses were all aimed at disputes with my invoices based on a disagreement over what work I'd done but now I know they can be applied to non-payment of the agency invoice because of client cashflow I'm even less happy.
Don't get me wrong, I don't live my life based on these payments being paid on time as I have about two years buffer behind me as anyone doing this with any sense would but nevertheless I'm not entirely happy potentially working for nothing.
Cheers,
Mark
Their main concern is clause b which I didn't include earlier because it isn't immediately applicable...
or
(b) where an invoice to the Contractor has been paid which subsequently becomes the subject of non-payment by the Client, the Contractor shall raise a Credit Note and reimburse the amount of the disputed invoice (in part or whole) inclusive of VAT to ReThink. ReThink reserves the right to offset any said invoice that has not been reimbursed against future Contractor payments. Any such held payments will become due to the Contractor when any dispute has been resolved or payment from the Client is received by ReThink.
The rightly point out that had the agency paid me and therefore not simply passed the risk straight down to me and the client had subsequently not paid them, the agency could ask for the money back.
Now as I said before I assumed these clauses were all aimed at disputes with my invoices based on a disagreement over what work I'd done but now I know they can be applied to non-payment of the agency invoice because of client cashflow I'm even less happy.
Don't get me wrong, I don't live my life based on these payments being paid on time as I have about two years buffer behind me as anyone doing this with any sense would but nevertheless I'm not entirely happy potentially working for nothing.
Cheers,
Mark
The fact that the timesheet has, I presume, been signed by the client would indicate (as the OP has said) that there is no question with his quality of work.
The agency has to tread a very fine line with the client, as they need the client far more than t'other way round. If the agency goes in all guns blazing to client, guess what... client will stall payment even further... cancel agency agreement etc..
Assuming they are the agency with 6 offices in the UK, and a pretty impressive client list, I am very surprised they don't factor already. If they do, then they are just playing silly buggers with you, and if they don't ask them why not, and suggest they should do.
The agency has to tread a very fine line with the client, as they need the client far more than t'other way round. If the agency goes in all guns blazing to client, guess what... client will stall payment even further... cancel agency agreement etc..
Assuming they are the agency with 6 offices in the UK, and a pretty impressive client list, I am very surprised they don't factor already. If they do, then they are just playing silly buggers with you, and if they don't ask them why not, and suggest they should do.
Edited by ysnnim on Tuesday 16th February 10:44
s!dern said:
(b) where an invoice to the Contractor has been paid which subsequently becomes the subject of non-payment by the Client, the Contractor shall raise a Credit Note and reimburse the amount of the disputed invoice (in part or whole) inclusive of VAT to ReThink. ReThink reserves the right to offset any said invoice that has not been reimbursed against future Contractor payments. Any such held payments will become due to the Contractor when any dispute has been resolved or payment from the Client is received by ReThink.
Well, you're stuffed basically. That's a killer of a clause. One of the few reasons for putting up with an Agency in the middle (after the initial introduction) is that they factor the risk of non-payment by the client. That clause specifically absolves them of that risk.
If all the other contractors are in the same boat then you need to determine if the agency are going bust or the client are, because it sounds like one of them is.
JonRB said:
I've had this situation with an agency before and had to end up going the full legal route (I can't say more due to a NDA) but crucially the wording of the contract was significantly different from yours. The wording said that they could only withhold payment if the event of a missing or disputed timesheet.
Your wording gives a much broader coverage and implies they could withhold payment if the client hasn't paid them, which is what this hinges round. The wording makes it far less cut & dried, unfortunately.
It's the phrase "or non-payment of a ReThink’s invoice by the Client" that does it. That's quite a broad phrase and they could quite successfully hide behind it.
Hey Jon :waves:Your wording gives a much broader coverage and implies they could withhold payment if the client hasn't paid them, which is what this hinges round. The wording makes it far less cut & dried, unfortunately.
It's the phrase "or non-payment of a ReThink’s invoice by the Client" that does it. That's quite a broad phrase and they could quite successfully hide behind it.
Yeah, I agree. It's even worse with clause b. This side of it simply didn't occur to me so on the bright side and education like this without it becoming that expensive is a good thing I guess.
JonRB said:
Still, look on the bright side; that's clear financial risk so is a good pointer for being outside of IR35.
Not sure why everyone assumes the late payment is because of cashflow problems.
My experience is most commercial invoices are paid late... by policy, not becuase of hardship.
The agency has no need to chase their invoice hard (presumably their slice is only 10-15%), because they can, and have, deferred paying the back-to-back invoice from the contractor.
Personally, I'd be chasing the end client accounts department to see why the agency invoice hasn't been paid. OK, that's what the agency should be doing, but it's you're money in the end.
My experience is most commercial invoices are paid late... by policy, not becuase of hardship.
The agency has no need to chase their invoice hard (presumably their slice is only 10-15%), because they can, and have, deferred paying the back-to-back invoice from the contractor.
Personally, I'd be chasing the end client accounts department to see why the agency invoice hasn't been paid. OK, that's what the agency should be doing, but it's you're money in the end.
In an effort to make myself less of a dufus for trusting a contract... reading clause b again it's this bit that made me assume it wouldn't apply in the case of client non-payment of the agencies invoice to the client...
"where an invoice to the Contractor has been paid which subsequently becomes the subject of non-payment by the Client"
...it specifically says that the invoice paid (i.e. my invoice to the agency) "becomes the subject" of non-payment by the client. That is there is a dispute over that invoice and not simply the ability of the client to pay the agencies invoice.
Hey ho.
"where an invoice to the Contractor has been paid which subsequently becomes the subject of non-payment by the Client"
...it specifically says that the invoice paid (i.e. my invoice to the agency) "becomes the subject" of non-payment by the client. That is there is a dispute over that invoice and not simply the ability of the client to pay the agencies invoice.
Hey ho.
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