A question for contractors - not being paid as per terms

JohnDorian

I’m a Ltd company contractor and would appreciate some feedback from other contractors as I have only been doing this for 2.5 years and not come across this before.

My Ltd company was engaged in a 3 month contract in August. A bit of background - I am a chartered accountant and the types of work the Company does is to do with organisations going through change (ERP, acquisitions etc). It is a nice little niche as most companies don’t have permanent employees that do this kind of work. Until now I had done two contracts in FTSE companies and had no problem with payments. I complete timesheet and someone at the client approves.

This client is small. I didn’t really want to do this but my last contract finished at the end of July and this client was really keen, offered a very good rate and tbh there wasn’t really going to be much happening in August so thought why not.

I was only here for 3 months initially but they asked me to stay to the end of March 20. The staff turnover in finance was high and no one with authority to approve was left by the time I joined so HR would approve my timesheets. Then an FD came in and she was responsible. For November I was asked by the recruiter to follow up as she hadn’t approved. I had to follow up a few times.

The terms are I am paid monthly on the 15th of the month after the month for which I submit the timesheet. For December the cut off was 10am this morning. I followed up for her to approve 3 times and she hasn’t. As a result the deadline is missed and I don’t get paid for December until February.

I’m finding this whole chasing up a bit demeaning. The FD knows she has to do it, receives an alert and both I and the recruiter have followed up multiple times. I’m thinking of terminating the contract.

My question is - my company has not been paid this month, despite submitting the to mesheet on 31 December 2019. This is purely due to the client not approving. Would this be a breach of contract? If so, I believe my Ltd company owe no notice period to the client?

Brynsam

JohnDorian wrote: »

My question is - my company has not been paid this month, despite submitting the to mesheet on 31 December 2019. This is purely due to the client not approving. Would this be a breach of contract? If so, I believe my Ltd company owe no notice period to the client?

What exactly does your contract say about payment terms? Also what exactly does it say about breaches of contract? It would be unusual to have a contract which doesn't give the erring party a chance to remedy their breach. You also need to check the notice period - again, you need to be precise.

PasturesNew

She's either trying to edge you out/making you unwilling to renew.... or she's as daft as a brush.

You will know if they have the money to pay you in the medium term; if so and if you can keep plodding on I'd just stay quiet ... and vow to refuse to extend if/when asked.

I find quiet and determined obstinacy is similar to revenge best being served cold.

Undervalued

JohnDorian wrote: »

I’m a Ltd company contractor and would appreciate some feedback from other contractors as I have only been doing this for 2.5 years and not come across this before.

My Ltd company was engaged in a 3 month contract in August. A bit of background - I am a chartered accountant and the types of work the Company does is to do with organisations going through change (ERP, acquisitions etc). It is a nice little niche as most companies don’t have permanent employees that do this kind of work. Until now I had done two contracts in FTSE companies and had no problem with payments. I complete timesheet and someone at the client approves.

This client is small. I didn’t really want to do this but my last contract finished at the end of July and this client was really keen, offered a very good rate and tbh there wasn’t really going to be much happening in August so thought why not.

I was only here for 3 months initially but they asked me to stay to the end of March 20. The staff turnover in finance was high and no one with authority to approve was left by the time I joined so HR would approve my timesheets. Then an FD came in and she was responsible. For November I was asked by the recruiter to follow up as she hadn’t approved. I had to follow up a few times.

The terms are I am paid monthly on the 15th of the month after the month for which I submit the timesheet. For December the cut off was 10am this morning. I followed up for her to approve 3 times and she hasn’t. As a result the deadline is missed and I don’t get paid for December until February.

I’m finding this whole chasing up a bit demeaning. The FD knows she has to do it, receives an alert and both I and the recruiter have followed up multiple times. I’m thinking of terminating the contract.

My question is - my company has not been paid this month, despite submitting the to mesheet on 31 December 2019. This is purely due to the client not approving. Would this be a breach of contract? If so, I believe my Ltd company owe no notice period to the client?

Normally for you to lawfully end a contract without notice, the other party would need to have fundamentally breached the contract.

I would very much doubt if a one off late payment was a sufficiently fundamental breach.

It would of course depend on the exact wording of the contract and the circumstances. If, for example, you could show good reason to believe that you were not actually going to get paid for the work you have done that could make it reasonable to terminate without notice.

JohnDorian

Sorry can’t seem to quote posts on the phone.

@Brynsam - Thanks. I see what you mean. The contract defines ‘service provider’ as my company, ‘client’ as the client that has engaged the company and ‘agency’ as the recruitment consultant. The terms for payment are that the service provider has to enter an accurate timesheet to the portal by 5th of the month following services provided. They then state no payment will be made until the following payment run which is the following month.

I have the following in the contract regarding termination - ‘the contract may be terminated by either party if the other is in breach of contract, or is in breach of contract and fails to remedy the breach within fourteen day.

So I’m guessing I can’t get out which is annoying.

@PasturesNew - I have no idea what goes on in her head! I don’t really work with her too much other than updates on progress.

@Undervalued - Thanks. I guess it is just going to have to be notice period then which is a bit annoying because I will then most probably not get paid for that until March.

Undervalued

JohnDorian wrote: »

@Undervalued - Thanks. I guess it is just going to have to be notice period then which is a bit annoying because I will then most probably not get paid for that until March.

That would be safest.

Obviously if they breach the contract by paying late you could claim against them for any losses that actually causes you. You would have a legal duty in any such claim to minimise your losses as far as reasonably possible (e.g use savings or arrange a loan rather than incur unauthorised overdraft charges etc).

If your your losses are modest (say £25 or £50 in lost interest) but you used it as an excuse to walk out, under certain circumstances that could cost the company a lot of money in lost business. In that case it wouldn't be reasonable cost them possibly thousands of pounds as a remedy / punishment for your petty cash loss.

ReadingTim

JohnDorian wrote: »

The terms are I am paid monthly on the 15th of the month after the month for which I submit the timesheet. For December the cut off was 10am this morning. I followed up for her to approve 3 times and she hasn’t. As a result the deadline is missed and I don’t get paid for December until February.

I’m finding this whole chasing up a bit demeaning. The FD knows she has to do it, receives an alert and both I and the recruiter have followed up multiple times. I’m thinking of terminating the contract.

Poor as this might be, I think termination is a little OTT on the basis of a single delayed approval. Mistakes happen, people get sick, other priorities etc can all mean a cut off is missed; plus as a chartered accountant, I'm sure you're aware of the concept of creditor stretch.

Ultimately though, distasteful or demeaning as you may find it, chasing late invoices is part and parcel of owning your own business, so if you find it as intolerable as you seem to make out, then perhaps contracting in this manner isn't for you.

JohnDorian

ReadingTim wrote: »

Poor as this might be, I think termination is a little OTT on the basis of a single delayed approval. Mistakes happen, people get sick, other priorities etc can all mean a cut off is missed; plus as a chartered accountant, I'm sure you're aware of the concept of creditor stretch.

Ultimately though, distasteful or demeaning as you may find it, chasing late invoices is part and parcel of owning your own business, so if you find it as intolerable as you seem to make out, then perhaps contracting in this manner isn't for you.

I’de be ok with it if it was the norm to miss payments but it isn’t, at least here in the Thames Valley. Everyone I’ve spoken to in contracting over the weekend has never had it happen to them and all were surprised that I am not being paid.

May be for other areas of contracting it is normal but in finance in London and Thames Valley the LTD companies definitely get their invoices paid as per terms.

As for contracting not being for me, I have plenty of interest and am increasing my daily rate with every assignment so I’m definitely not going to get into the whole ‘it’s ok to late pay invoices or this isn’t for you’ because business is going well for me and once I go back to a FTSE after this one I doubt I will have this issue again.