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How do I get paid? strange situation involving contract work

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7 years 6 months ago #2030 by HenryCW
I'm a freelancer/sole trader having real trouble getting paid by a client.

I recently worked 3 small contracts for my client, a marketing agency (3 days/3 days/1 day). I'm not set up as a LTD company, so I had to register with an umbrella company in order to get paid.

The first contract has been processed. I submitted my timesheet and I was supposed to be paid on the 17th, but I have received no payment yet.

The second two contracts haven't been put on the umbrella company's system yet. That means I can't even submit timesheets, so the umbrella company can't invoice the client.

I've since been in touch with the umbrella company, and they told me that they can't pay me because they haven't been paid by the client. Apparently the client isn't even communicating with the umbrella company. The umbrella company also told me that they can't put any new contracts on the system until the client pays the money it owes them.

This leaves me in a difficult position:
* I can't get paid by the umbrella company until the client pays them.
* I can't get the umbrella agency to send off invoices for the second two contracts
* I can't invoice the client, because they're unable to pay me directly anyway as I'm not LTD company.
* Because I can't invoice the client, I also can't take them to small claims court (I think).


What are my options here? It seems the agency can just delay payment indefinitely and there is nothing I can do.

Any advice appreciated.

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7 years 6 months ago - 7 years 6 months ago #2031 by james@cpa.co.uk
Hi HenryCW,

Thanks for the question. It's unusual I must say.

I don't understand why the Umbrella company are insisting on only processing one invoice at a time and won't raise a second invoice until the first is paid. That doesn't make any sense to me.

Most companies have multiple contracts on the go and multiple invoices outstanding.

Their position makes no sense.

Yes you do have to invoice your client before you can pursue payment. I don't understand why your Umbrella company would block you from doing so. Don't they get a percentage of turnover? Or are they on a flat fee?

I would take this up with them.

Also would be the question of who does the collection of the unpaid invoices raised by the Umbrella company. Are they in charge of collection or do they give you the right to enforce payment?

James
CPA

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7 years 6 months ago #2032 by HenryCW
Thanks for your response, James.

Spoke to the umbrella agency today. They said the client never actually sent them any details about my 2nd and 3rd contracts. This slightly contradicts something they said previously, but I am inclined to believe them. The client is looking shadier by the minute and I believe is using delaying tactics.

The first contract is still outstanding. The umbrella company told me they may take legal action against the client if they don't pay soon.

I was considering creating a LTD company and invoicing the client myself. However, I've learned that technically I can't invoice the company for a contract that was undertaken before the ltd company was created.

My other problem is I never really received any official agreement about my work placement. The jobs were all arranged at short notice. In retrospect, it was stupid of me to accept, but this is a well-established, multi-national agency and I assumed it was all above board.

I do have informal agreements via email though. It would not be hard to prove that I was asked to work on certain dates for certain money, and that I turned up and did the work.

I'm wondering if I could invoice the two individuals that I had contact with and take them to court, rather than the company. Perhaps the fact that I didn't receive any official contract could work in my favour this way?

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7 years 6 months ago - 7 years 6 months ago #2033 by HenryCW
Also just to add, I believe the umbrella company is in charge of payment.

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7 years 6 months ago #2034 by james@cpa.co.uk
Hi Henry,

I would seek legal advice as this is by no means a standard debt collection process.

However even without formal contracts completed for the second and third tasks, I am hopeful you have enough in the form of emails or other communications to show that a verbal contract existed and that your work was accepted.

It maybe that you have to have a test case for the first contract.

with regard to the second and third contracts, legal advice after looking at everything will be able to tell you whether you have a claim via the umbrella company or personally.

Good Luck. If you or the Umbrealla company want any assistance from CPA in the collection, please feel free to email me the details.

James

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7 years 6 months ago - 7 years 6 months ago #2036 by HenryCW
Thanks for your help James.

What do you think would happen if I just sent them an invoice as a sole trader?

Is it their choice to refuse this, or is it actually impossible for them to accept it?

Regards, Jon

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