This company just fixed the most annoying thing about contract recruitment… (hidden margins)

This is not a freelancer ‘sob story’ and neither is this blog about the challenges of procurement leads pushing contract agencies for lower margins.

It’s a story about the human interaction between a project manager and a freelancer.

make your valuable network valuable

Hidden agency margins hurt the freelancer and the manager because neither is able to ascertain what level of work is required or should be expected based on the set fee.

An example:
A project manager hires a developer for 12 months at a cost of £700 per day who is in fact paid £560 by the agency.
For the PM this is a stretch. It is slightly above the ideal budget and now it is a necessity the developer works fast to bring in the work early and come under project budget.
For the developer this is a job taken because of timing and ‘if a better paid job comes along’ it will be hard for the freelancer to reject it.
4 weeks into the project the PM has a one-to-one with the developer to discuss the pace of the work. In theory neither are contractually permitted to disclose the rate. (This only helps the agency and is a policy that is often disregarded).
The PM mentions the stresses they are under on budget control. Casually the freelancer mentions they are also concerned as the agent said budget was a pressure so a low daily rate was applied.
Both sides feel uneasy. Neither side is at fault.

Another example:
A project manager asks an agency to find a developer for a 12 month contract. They do. High fives all round.
The agency supplies an excellent selection of profiles and following some interviews one developer is selected who joins the project a few weeks later.
Unfortunately the management is changed, and the business direction is under question so the project is halted immediately. Two weeks payment is made to the agency and most of this is passed to the freelancer.
All that work for 2 weeks of margin. Is this good trade?

A final example:
A project manager and a freelancer catch up having worked together a few years ago.
As luck would have it, one is in need of a freelancer and the other has just finished a contract.
Procurement policy dictates an agency should be used to manage the papertrail, help on timesheets and invoicing and keep the relationship IR35 friendly.
A call is put in to a known agency … what margin can you charge if I give you a candidate?
(Frankly I’d prefer you offered us the work at our normal margins but) “how about 10%?”
Both sides have done the other a favour yet neither have received one!

As shown by the above it is good news that 6prog designed a platform with managers, freelancers and recruiters’ best interests in mind. An ultra low services charge for paperless paperwork that streamlines the process, a fixed fee for recruitment services (or networking introductions) AND no hidden margins.

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5 Costly Mistakes to Avoid When Consulting

Originally published > www.inc.com/brenda-della-casa

5 Costly Mistakes to Avoid When Consulting

Take note: If you’re afraid to offer a contract, you shouldn’t be in business.

 

There are few things more fulfilling for new business owners than signing that first client and having the chance to do what they love under the structure of their own business and brand. Freelancing is an exciting venture, and in today’s market, it’s big business. A 2016 study by Upwork showed that there are 55 million freelancers in the U.S., making up 35 percent of the American work force.

If you’re thinking of joining the consulting club, let me be the first to congratulate you. You’re in for one of the most rewarding experiences of your professional life, but only if you do the work to ensure that you protect yourself. Ignore this important step and you’ll set yourself up for a lot of unnecessary stress and possible burnout.

Here are five tried and tested ways to avoid some of the more common mistakes made by new consultants.

1. Mistake: Not setting the right tone.

Because most freelancers are usually so excited to have their first one or two clients, it’s not uncommon for them to fall into the trap of doing a little extra (read: free) work here and there. They will eagerly respond to messages and emails immediately and take calls when they really should have been scheduled. They think they’re being generous and accommodating (and they are), but the clients see this as setting a tone for the rest of the contract. This tends to backfire as clients become accustomed to having responses in real time, all of the time. Before you know it, confusion ensues. The consultant is overwhelmed and both parties are frustrated and resentful.

Protect yourself: Put your guidelines in writing — and stick by them.

Have a very clear discussion laying out your professional boundaries and ask your client to do the same. Come to an understanding about working hours and response times and agree on how you will schedule calls, meetings, and Skype sessions. Once you are in agreement, put all of this information into your contract (see below) and have both parties sign it. If you are going on vacation or going to be unavailable on certain days, let your clients know as far ahead of time as possible. Ask them to do the same.

2. Mistake: Being afraid to put a contract in place.

I recently asked 15 consultants if they offered their clients contracts and was surprised to find that only three had one in place. The most common reason for not offering up a formal agreement? Consultants were worried that doing so would cost them a gig. The best way to move past this costly concern is to understand that quality contracts are put into place to protect both parties, not for one to strong-arm the other. This is done by making responsibilities and timelines clear, securing payments and fees, and putting a formal agreement in place if the relationship does not work out.

Protect yourself: Make it legal.

For most professionals, a contract is a basic step in the process of doing good business. Put bluntly, anyone who is unwilling to put his signature where his mouth is isn’t someone you want to be in business with. In fact, several business owners I spoke with claimed they would steer clear of a consultant who didn’t offer one, out of fear that that consultant would be unprofessional or untrustworthy. Paying a few hundred dollars to have a lawyer look over your verbiage (to ensure that you have covered everything properly and are fully protected) is a worthwhile investment.

3. Mistake: Not holding clients accountable.

Whether it is allowing clients to hand in deliverables late, jumping through hoops to complete tasks by unreasonable deadlines, or working with an unpaid invoice, many freelancers help create a culture of chaos by not drawing a line in the sand when clients behave badly.

Protect yourself: Create consequences.

Though revisions and delays are inevitable on most large-scale projects, there needs to be a clear understanding as to who is doing what and when it is due. I personally like to use a task-management system to manage to-do lists and follow-up with a weekly email outlining what is being worked on and what is outstanding. It is also important to remember that accountability goes beyond checking items off a list. If a client schedules a call and goes MIA, doesn’t pay an invoice on time, or crosses a line, you need to have a system in place to deal with it. Charging the client for a percentage or the full amount of time you set aside for the call is not inappropriate and stopping all work until an invoice is paid is acceptable. Just be clear to have these guidelines laid out in the contract beforehand. Once they are in place, it is up to you to abide by them.

4. Mistake: Allowing them to treat you like their employee.

One of the biggest struggles freelancers face is forgetting that they are in a professional partnership with their clients. You are doing work for them, not working for them. The distinction is an important one.

Protect yourself: Remember that boundaries are a good thing.

As a consultant, you are not privy to the benefits of a full-time employee, nor are you involved in the day-to-day running of the business. You have been contracted to do a specific job because of your talent, not to get caught up in office politics or drama or to feel anxiety about the mood or shifting decisions of your client every day. Additionally, when on-site, you are not there to “jump in and be a team player” on tasks that are not outlined in your contract.

5. Mistake: Getting too friendly with clients.

We all want to work in a friendly environment, but getting too familiar with a client will inevitably blur the line between the personal and professional relationships. This can make objective decision-making and clear communication difficult in the long-run.

Protect yourself: Keep a professional distance.

No one is saying not to open up a little bit or that you need to turn down every cocktail invitation, but it is important to know what to share and when to leave. This is where that age-old advice still rings true: Do not open up about or do anything you’d be embarrassed to have in print. Simple.

PUBLISHED ON: MAY 8, 2017

 

 

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The difference between a contractor and a freelancer.

You have probably seen the terms ‘contractor’ and ‘freelancer’. If you’re self employed you’ll likely fall into one of these two categories.

A contractor is a person who provides services to a person or organisation (a client) for a specified and finite period of time. A contractor usually meets the following characteristics:

  • Works on one contract at a time for one client
  • Does not operate under standard employment, but rather a contract that defines their arrangement with their client for a defined period of time
  • Are not on their client’s payroll
  • Is set up as a sole trader, a limited company contractor or an umbrella company contractor
  • Commonly found in the IT, engineering, public sector, health, education, social work, finance and consulting industries

A contractor’s contract will stipulate their working arrangements, which will determine whether they are genuinely self-employed or temporarily employed under the guise of self-employment. This is referred to as being outside or inside ‘IR35 legislation’.

A freelancer also provides services to a client for a finite period of time. However, this period of time is not always specified. Here are the characteristics of a typical freelancer:

  • Might be working on several freelance projects at once for different clients
  • May not necessarily operate under a contract the same way as a contractor
  • More often works from home or from their own office than the client’s office, because as they are less likely to have stipulated working hours. They are more likely to have to dedicate a certain amount of hours per day or week, but not at specific times
  • Similarly to contractors, freelancers aren’t on their client’s payroll
  • Will also be set up as either a sole trader, as a limited company director or will be getting paid via an umbrella company
  • Commonly found in creative industries such as digital marketing, graphic design, media, publishing, and architecture

Contractors and freelancers aren’t subject to the same employment rights as permanent employees. The term ‘freelancer’ is simply a way to describe the nature of your work; it is not a legal term – therefore a freelancer will still fall under the term of ‘self-employed person’. As such, freelancers will also have to consider their working circumstances to determine if they work inside or outside IR35.

How they get paid

Because freelancers are free to set their own rates per-project and based on how much experience they have, it is more financially beneficial to contract through a limited company as they can open themselves up to more opportunities with clients whilst maximising their take-home pay.

That’s not to say that contractors can’t chase the rates they desire, but more often than not the rates for a contract are already pre-set by the client or the agency. If the contractor is not satisfied with the rate, they can try to negotiate for higher pay.

If your assignment is deemed to be inside IR35, you have some options:

  • Continue working through your limited company – you could continue to contract in the public sector through your limited company, and accept the lower take home pay you will receive. You will also no longer be able to claim certain expenses.
  • Negotiate a higher rate – adjusting your rate to make up for the loss in take home pay is an option, although an adjustment that your client will agree to might not make up for the loss.
  • Switch to umbrella – switching to a compliant umbrella company means you won’t have to pay any Corporation Tax or dividend tax on top of paying income tax and employees NI, and you will receive employee benefits unavailable to you when contracting through a limited company. Find out more about switching to umbrella.
  • Leave the public sector – as many contractors have chosen, you also have the option to leave the public sector for the private sector, where these rules to do not apply to the same extent.

Source: https://www.churchill-knight.co.uk

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