I’m a self employed contractor with my own LTD compmay. Up to now my contracts have been with multinational companies, who insist on paying contractors through an agency. I submit a timesheet on a weekly basis, and then an invoice every 4wks (I had the option to invoice weekly, but that sounded like a bit more faff). The invoice gets paid within a week. I don’t know when or how the agency gets paid, but their input is minimal so their fee is pretty small (<1%).
I guess that if I was contracted to the end client directly, then I would have to accept slightly longer payment terms – that seems normal with most contracts I have seen.
However, I have been lined up with a job for a consultancy, who would want to farm me out to an end client. For this their cut is greater (~20%). Their ‘standard contract’ states that my company would get paid 5 days after they get paid by the client. This is likely to be at least 30 days, typically 45 days, and up to 60 days.
This is new to me, but is it common?
I feel a little wary considering that me getting paid is based on the payment of a contract of which I have no viability or control. To my mind that it means that the consultant company is carrying almost zero risk from not getting paid, which is not reflected in their margin.