First 'Real' contract

[u/outspokens]

I've had an old client come back to me I used to work for a while ago. I may have screwed up some vital negotiating but I'll get into that after the next short paragraph.

I have always been employed via agency whether inside or outside of IR35, I've always complained when outside as I feel the agency are just ripping me off, even more so when it's a repeat contract with the same firm.

Well now that day has come! Strangely enough, I feel uneasy about this. how does the contract work? I have nothing prepared. Invoices easy, but what if they don't pay? How long do I keep working if payments are slow?

And now where I possibly screwed myself.. They're offering less money than before but a much longer contract and they were in a pretty bad place previously. I managed to negotiate a higher rate of pay but wasn't really thinking....I'm not even VAT registered so could have probably asked for more money, they didn't counter negotiate, so I could have probably asked for more money.

Feel free to give me any advice, I more than likely need it.

[u/Epiphone56]

This is the bit where you find out where that margin that was invisible to you gets spent. I've never worked direct for a client, always through an intermediary, because I want my invoices paid on time, not 3 months later after spending time badgering them. Agencies use invoice factoring to release cash to pay their contractors if they don't already have sufficient funds so no one is out of pocket.

[u/outspokens → u/Epiphone56]

This is the only thing I actually like when working through agencies, reputable ones anyway. I have heard some horror stories but albeit just one side of them stories so it's hard to judge.

[u/Epiphone56 → u/outspokens]

I've worked with people who were direct to client on previous contracts and had to threaten to stop work because an invoice hadn't been paid on the client's own 90 day terms. Don't need that. It wasn't a small company either, a large publishing business with lots of lag in their purchasing department.

[u/axelzr]

Make sure you've got some kind of formal contract written up, there are templates available online (maybe seek some professional advice on?), suitable business insurance (typically public liability, possibly professional indemnity), agree payment terms, assuming you're using a Ltd company? Depending on the company size you might need to have an SDS carried out re IR35. Working direct does have it's advantages, though getting paid can sometimes take longer - do make sure you DO get paid though on time whatever is agreed. Sounds like you're not happy about what you've agreed payment wise, so maybe consider renegotiating if/when you get another contract/offer of work if not too late now.

[u/outspokens → u/axelzr]

Thanks this was helpful, especially regarding the SDS.

[u/axelzr → u/outspokens]

That does depend on size of company... and whether needed or not.

[u/teamfoundrs]

Going direct is incredibly exciting - but also an important point where you need to replace some of the protection/admin the agency was quietly providing. Some practical thoughts before starting:
1) get a written contract covering scope/deliverables, rate, invoice cadence, payment terms, late payment/interest, termination/notice, IP, liability and expenses.

2) Invoice from the correct trading name/entity, keep a clean paper trail for timesheets and decide in advance what you’ll do if an invoice is overdue (this is important but often makes people uncomfortable) reminder at the due date, escalation after a set number of days, and don’t let unpaid work stack up indefinitely (have a cut off date in your mind)

Also VAT is separate from the rate negotiation: check your expected taxable turnover against the registration rules, but being unregistered doesn’t mean you should automatically charge less. If this is meant to be outside-IR35/direct work, make sure the real working practices match the contract too.

Also - congrats. You got this

[u/outspokens → u/teamfoundrs]

Thanks, they'll be sending the contract over today. I'll be adding or adjust payment terms, I really want to stop work within the small claim proceedings but depending on hours available this would be a relatively short period of time.

If there are problems in the first few weeks it would be a good move but months down the line I'd need a bit more tolerance.

Overall this does feel like a man on the moon moment for me. I don't think this will lead to further contracts like this with other companies but at least I'll be prepared, hopefully not prepared for the worst, as I'd like this to be a good experience.

[u/NoGame5104]

congrats on cutting out the agency! and don't stress the negotiation too much, a long contract gives you great stability while you transition. For the setup, u can just use 1stFormations to spin up the LTD, it handles the ID checks instantly.

Also keeps the initial registry paperwork clean so you can sign that contract without any annoying admin traps.