The advantages & disadvantages of contractors getting a contract directly with a client?By admin | Comments: 0 | September 29, 2016
Contracting direct with a client is the dream, but it has its pitfalls, many things you see and hear in the contracting world have their pros and their cons, contracting is about weighing the options up specifically for you, what’s working for someone else might not work for you.
Let us jump straight in here with some of the points that will make you feel excited about working directly with a client. The key and most important point to make is that your rate is the rate, whether it be daily or hourly, you’ll more than likely notice an increase, those recruitment company fees have ‘disappeared’ for the client. You will more than likely have the ability to write your own contract, agreeing the terms directly with the client, fancy having a two-hour lunch break on a Friday? In all seriousness this can help with employment status, if you can agree terms with the client you can write them, to a degree, to your advantage. Flexibility is key to contracting direct, you really are the boss and that means things like negotiations are easier, it’s down to you to discuss renewals and extensions directly with the client rather than rely on a third party who pops up every couple of months. Play your cards right with the first few months and you may just end up staffing future projects that pop up, I’ve seen it before, if your client likes you, you could well become the recruiter, making money off of other contractors, not in every case, but remember, if you’re direct, you’re the boss, there is no middleman, opportunity is not something to ever be overlooked.
It all sounds ideal and like a bed of roses, right? Wrong, contracting direct with a client does have its pitfalls, it’s not all rainbows and blue skies. We mentioned that your rate might see an increase, do be aware you’re direct now, which means the negotiations get harder, your client knows the recruitment company took a cut of what they paid, they might use this to their advantage, make sure you brush up on your negotiation skills! Agreeing terms directly with a client is fun, but we need to remember that if you guarantee something in a contact that a recruitment company wouldn’t specify, it’s a legally binding contract, “Made Up Company Limited guarantee to be present at the client site, 5 days every week for 6 months”, I’m not a lawyer, but that statement could get you into hot water if you break a leg, it’s worth getting a contracts lawyer involved. That nice new shiny rate of pay has its own payment terms, recruitment companies tend to bank roll their clients, paying you sometimes before they get paid by their client, goodbye safety blanket, payment terms is a topic you should be keen to discuss, 60-day payment terms means that your client will most probably withhold your payment until the last minute, that’s business, be aware that you’ll spend time chasing invoices! Lastly, contracting directly with a client means you need to be on top of those relationships, building a relationship with a client takes time for them to trust you and what your company is capable of, don’t expect to win a 12-month contract straight away, those recruitment companies took them for lunch a couple of times and probably spent 3-months wooing them for the business!
It all sounds a bit buyer beware, doesn’t it, contracting directly with a client is a great experience and a fantastic achievement in terms of business, you made the sale! It would be my choice to contract directly with clients because I love the business aspect of it, but it does take up more time and there’s a lot of work to be done. My advice, do your homework about the client, negotiate like a real businessman and make sure there are no grey areas in the contract, make it well defined, do spend the money on a contracts lawyer, you’ll thank me one day!