A Worrying Turn of Events Options

[JDP]

OK, I don't do anything at all with this company, in fact I am not even on their list of freelancers. But I know several people who are, and I was shown a certain letter sent from their office the other day. I am not trying to create a slanging match about the company, but wondered what other peoples' opinions/expressions etc of the letter they got were?

I am not going to re-type the letter, as I don't have it, but in bullet points, is said more or less:

- Due to the credit crunch, we are tightening the way we do things. OK, fair enough, we all have to do that, we as freelancers are running a business to

- We are not in a position to raise freelancer rates for another year, October 2009. Yep fair enough, generally rates go up in 'trend' rather than annually by default

(this is where this gets interesting)

- Due to the way things are, we are delaying paying. If you reduce your INVOICE (ie invoice inclusive of PDs, travel expenses etc) by 5% you will be paid within 20 days of receipt of the invoices. Otherwise, if you don't agree to this, we are going to pay you in 60 days regardless. WTF how can any responsible company do this? It seriously is not happening, you can't tell people to reduce their invoice by 5% or be paid late, we have businesses to run, mouths to feed etc. As it is the touring world is pretty quiet at the moment, meaning a lot of RnR boys are doing corporate, now you take the p!ss by taking 60 days to pay. An invoice is set for 30 days, or whatever terms you have written on it. Freelancers say how much they charge, freelancers set the invoice terms. Its as simple as that.

- On average it takes us 73 days to get paid by our clients OK fair enough, but you do events all year round, and are a company of certain large turnover. There is NO WAY you can't have the money in the bank to pay freelancers, and if you really didn't how can you pay people if your average is 73 days, its still 13 days away from when the invoice you want to pay is 'due'. Anyway not my problem. I can't send a letter to my bank saying on average I get paid in 60 days, so I am going to delay my mortgage payments by this. If they put 30 days on their invoice, they should hassle their client until the pay it, its not the freelancers problem the finance department can't chase invoices on time.

Anyone have any opinions on the above? Did you get the letter, what have you done, or what will you be doing about this?

Cheers
J

[Sound In Glouces...]

think about it another way


some of my suppliers give me a 60 day account

if I pay within 14 days, I get a 5% discount

this is exactly the same thing, just worded the other way around

if they usually take 60 days to pay you and will pay you the full amount in 60 days, whats the problem? They are merely offering mutually beneficial payment terms. 1, the company pays the staff less 2, the staff get paid quicker. If you arent happy with that, then continue to wait your 60 days.

[richard]

I think the fact is that it is usually up to the supplier if they want to offer 60 day credit, and also if they want to offer a discount for prompt payment. While it can be argued that no-one is forcing you to work for this company, it still sounds rather harsh to load this on to the freelancers for whom prompt payment is rather neccessary.

[Bryson]

This is indeed a dangerous precedent, and IMO, an abuse of the power that the company have over their freelancers - they know that because they're dealing with a small business they can use that power to shore up their own cashflow problems.

So what if takes 73 days to get paid by your clients? Are they admitting to trading while insolvent? Because that might be a bad idea to tell everyone about.

[Guest_lightnix_*]

It's not just this business...

Corporate giants are sucking the lifeblood out of thousands of small businesses by imposing new delays in the payment of their bills, it is claimed today.

Small firms face oblivion because they are running short of the cash needed to pay for wages, rents and materials.

Some 51 per cent have seen an increase in the time it takes to get paid, according to the Federation of Small Businesses.

The tactic, a direct result of the credit crunch, means they are finding it increasingly difficult to get their hands on an estimated £18.6billion that is owed to them.

Among the latest blue chip companies to hit suppliers with punishing changes to payment terms are Boots and the fashion retailer Matalan.

Full story here...

There are already people moaning about the shortage of crew - just how will this help matters? Talk about a disincentive to go / stay freelance

Who is the company concerned, by the way?

This post has been edited by lightnix: 10 Oct 2008, 6:07 PM

[tvi675]

This seems a move very similar to one that is being made by a number of large high street retailers, according to an article I read this week (although for the life of me cannot find right now!)

To give the gist of it, these large retailers have extended the time it takes to pay the invoice, and then are either automatically removing a percentage of it for various reasons (advertising, store refurbishment, international expansion, because they feel like it, etc), or are telling their suppliers that if they reduce their invoice by a certain percententage, it will get paid quicker.

The article was about how this is going to hit the small businesses that supply these large chains (not being able to pay staff, overheads, etc), although if this principle production/hire/events companies and their freelancers, then it could well mean that the freelancers lose their overheads.. ie gas, leccy and the roof over their head!

Worrying...

[Bryson]

Who is the company concerned, by the way?

JDP's post did have the name originally, but for the legal protection of the Blue Room, we removed it for now. We'd rather keep the name out of the thread for now.

Can't stop him sending you a PM with the info, though....(well, we can...but we probably won't...)

[JDP]

think about it another way


some of my suppliers give me a 60 day account

if I pay within 14 days, I get a 5% discount

this is exactly the same thing, just worded the other way around

if they usually take 60 days to pay you and will pay you the full amount in 60 days, whats the problem? They are merely offering mutually beneficial payment terms. 1, the company pays the staff less 2, the staff get paid quicker. If you arent happy with that, then continue to wait your 60 days.

Yes, but thats your suppliers saying "Have a 5% discount on us", as opposed to you saying I am going to reduce your invoice by 5% then pay in 20 days, otherwise, if you want paying in full, wait 60, no other choice. Sorry, thats actually quite arrogant a statement to make. You do discos, so I guess you have a 'day job', freelancers don't they rely on the money they invoice being paid full, within their terms, to feed their families and keep a roof over their heads. True it is 'turned round', but thats the entire point, if the freelancer says that then fair enough, but for a company to deploy that scheme as a delay for paying people, its atrocious. If the freelancer can afford to give a 5% discount, then fair enough, but if they can't give a 5% discount, the chances are they will not be able to afford to wait 60 days for payment either!! The company concerned to corporate road shows, and other events lasting several days, to knock 5% off a final invoice is taking £50 off 5 days work, doesn't sound a lot, but that could be parking for one day somewhere, or a weeks shopping or your kiddies school trip. The point is, irrespective of the companies view, the don't know if the 5% means anything to the freelancer or not, especially in these times of uncertainty, 5% off a bill could mean a lot to anyone.

I think the fact is that it is usually up to the supplier if they want to offer 60 day credit, and also if they want to offer a discount for prompt payment. While it can be argued that no-one is forcing you to work for this company, it still sounds rather harsh to load this on to the freelancers for whom prompt payment is rather neccessary.

This is very true, its down to the supplier, but in all my years of freelancing I have always agreed MY terms of payment, rather than be TOLD the terms of the payment. It can indeed be argued nobody is forcing people to work for the company, but at the same time, in this time of uncertainty, with people canceling jobs left right and centre, its a bit stupid to turn down work if its being offered to you on a plate.

There are already people moaning about the shortage of crew - just how will this help matters? Talk about a disincentive to go / stay freelance

Who is the company concerned, by the way?

I can tell you that the company is [removed]. However, this post may be edited by the Moderators to stop a legal battle. If they edit it, I will send you a PM.

Moderation: Sorry - companjy name removed - in today's litigious society, we can't take any risks. Their lawyers have more money than us!. But if anyone has a paper copy of this letter, please send us a copy....

[Jivemaster]

Sadly this is the "free market" that is the domain of freelancers, and sadly it really is "like it, or get out".

I don't think it should be like this, but I think the current financial climate is likely to have lots of medium and small casualties as well as big ones. I'd be keen to reduce exposure to long term credit as well as bad debt risk.

[JDP]

Sadly this is the "free market" that is the domain of freelancers, and sadly it really is "like it, or get out".

Actually, its not! I work for 3 - 4 companies freelance, and I have NEVER, EVER experienced that. Freelancers, companies etc should never have to have their terms dictated to... you send an invoice, it has your terms, you get paid within your terms, its as simple as that.

MOST if not all freelancers have at least 4 or 5 companies they work for, and quite simply, as Nick points out, its the companies that need the freelancers, rather than the freelancers needing the companies.

This post has been edited by JDP: 10 Oct 2008, 7:17 PM

[Guest_lightnix_*]

I can tell you that the company is [removed]. However, this post may be edited by the Moderators to stop a legal battle. If they edit it, I will send you a PM.

Moderation: Sorry - companjy name removed - in today's litigious society, we can't take any risks. Their lawyers have more money than us!. But if anyone has a paper copy of this letter, please send us a copy....

Sorry, moderators but that's bullshit. Will Boots and Matalan be suing the Daily Mail in connection with the story in my last post? I doubt it somehow. Why then, should said company sue the Blue Room simply for telling the truth, especially if you offer them the right of reply

Oh well, I suppose we should all look on the bright side: By the time the Olympics arrive, people will be able to happily charge £500 a day, because there'll hardly be any freelancers left by then

[Bryson]

Sorry member, but that's bullshit. (You said it first.)

Right now, we only have JDPs word that the letter exists. We're trying to get a paper copy ourselves to confirm. And when we do, and if the letter doesn't say anything about not re-distributing it, then we'll post the name for all to see.

Would it be OK if we printed unsubstantiated rumours that the company you worked for was unable or unwilling to pay it's bills in a timely fashion? Because that's what we're discussing here and it's a pretty serious accusation...

[soundo26]

I can confirm that the letter does exist, this is a bad precedent, freelancers are not large businesses and cannot carry this! 30 days is a standard invoice payment period and that often gets stretched by companies using delaying tactics......Oh sorry we seem to have lost the invoice, can you re-send it....etc. For years the government have tried to introduce penalties for late payment, the sooner this is introduced, the better as far as I'm concerned. In this climate companies are going under/being taken over all the time, it is dangerous to accept these long invoice periods, as it is, with a 30 day period, large debts can be built up also, but at least you do have some time to react if things seem to be getting suspicious, a much larger bill can be built up if the freelancer is working a lot for a particular company which could more easily disappear over that sort of period leaving freelancers very vulnerable in the event of a collapse!

Usually freelancers live pretty much hand-to-mouth, they are not banks and should not be abused by companies in this way. This company should be blacked if they try to enforce this, otherwise others will also try it which will cause a lot of hardship amongst our technical community, these companies cannot function without us, they don't want the expense of employing full-time technicians so rely on freelancers who they only have to pay per job done, they cannot have it all their own way.

[Bryson]

Got the letter in question? Scan and email it to a moderator or admin, please!

I think Soundo has hit the nail on the head there: the availability of credit from the actual banks is dropping, so they're trying to get their credit facilities from the freelancers instead!

[Jram]

If you reduce your INVOICE... you will be paid within 20 days of receipt of the invoices. Otherwise, if you don't agree to this, we are going to pay you in 60 days regardless.

I'd investigate whether this constitutes blackmail... The Citizens' Advice Bureau should be able to help (but go early, and take a book)

Certainly, there is legislation in place to prevent companies from making unlawful deductions from wages. Whether this holds true for the invoicing self-employed, again, worth investigating.