Even for the most profitable of businesses cashflow is still an extremely important part of keeping the lights on and the bills paid. It doesn’t matter how many people you have on your debtors list, when your employees payday hits the money has to be paid out. It is the difference between getting the money in and paying it out that we refer to as cashflow and it could be one of the unforeseen consequences of the IR35 reform.
Why IS cashflow an issue now?
In 2 words, salaried employees. Contractors who find themselves within IR35 are very likely to find themselves on a payroll. This has become an issue because the end client may have extended payment terms with the agency, in some cases we’ve heard of 90 days or longer. So the contractor does the work, but it’s 90 days before the agency receives payment from the client. In the meantime the contractor is treated and paid as an employee of either the agency directly if they run agency payroll, or more likely an Umbrella company. It is this disconnect between B2B invoicing and the employer/employee relationship that is starting to cause issues. It only takes an agency to have a few clients on extended payment terms and the strain can start to show.
Quad Management can help! We are always happy to talk about agency funding options if you think this is something that may help. Quad Managements invoice factoring can help you to ensure that all your contractors are paid in full on time every time whilst improving your own cashflow. To discuss your requirements in the strictest confidence just get in touch and we’ll get straight back to you.