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5 Things You Need to Know About Contracting Directly | Contracting Scout

5 Things You Need to Know About Contracting Directly

As a contractor you can obtain contracts by either using an agency, or contracting directly with the end client.


Direct contracting is considered the ideal option if you want to truly ‘be your own boss’. But what exactly does it entail? And it is right for you?


Read on as we discuss the ins and outs of contracting directly with the end client.


Contracting Directly: Maximum control

The main attraction for contractors to go direct is that they have maximum control over who they work for, when and how they provide their services. This means, firstly, you can choose which contracts you take on. With an agency, you have less control over the location and duration of contracts as well as the client you’ll be working with.


This option also allows you to work exclusively with clients in a certain location if it suits you. You might prefer contracts of a certain length too, whether that’s shorter 3-month or longer 12-month contracts. It’s also up to you which clients you work with, so if you have a bad experience with one you don’t have to return to them.


On your terms

Another benefit to contracting directly is that you can negotiate your own terms. While agencies will charge a standard rate for your services, you can calculate your own contractor day rate. Consider your business expenses, taxes and value-add to make sure you’re getting the right amount for the services you offer.


Or is it?

The downside to creating your own terms is creating your own contracts. With no agency on your side, you may find yourself signing up to standard contracts put forward by your clients. These contracts could complicate things when it comes to adhering to IR35 regulations.


Contract templates are available online, which can be adapted to your specific requirements or terms and conditions. The government also offers advice on contracts and what they should include. However, it’s always advisable to seek professional assistance when drafting up a contract as this investment can pay off in the long term. Alternatively, if clients insist on using their contract, it might be worth getting professional help making amendments.


Handling your own marketing

One of the main advantages of recruitment agencies is that they market your services for you. They have an established network of contacts, so it’s much easier for them to generate leads and secure contracts for you. In contrast, working directly with clients means you handle your own marketing.


This isn’t necessarily a downside. However, it does make direct contracting more suitable for experienced contractors. As you spend more time contracting, you’ll build your own network of clients and contacts to make marketing easier. Your reputation will begin to grow and your business will grow from word of mouth or personal recommendations.


Cash flow problems

As a direct contractor, you’re responsible for collecting payment for your services. This, for one, can add a lot of hassle as some clients will be less co-operative than others. Dubious companies will be more likely to attempt to dodge payments when you have nobody fighting your corner.


This can lead to cash flow problems for contractors, in contrast to agency work, where you will receive payment regardless and it’s up to the agency to chase the invoice. It’s always a good idea to run credit checks on companies before working with them, to avoid riskier relationships.


The verdict

Contracting directly provides more money for your time and greater freedom, but sometimes at the cost of less security and more hassle with contracts, marketing and cash flow. Because of this, it’s typically a better fit for more experienced contractors with their own contacts and client relationships. As well as reducing the likelihood of missed payments, this can help provide a more consistent flow of work and income.


Get support for direct contracting

Direct contracting doesn’t have to mean going it alone. Contracting Scout assists contractors with a range of accountancy and financial services to help you thrive. Whether it’s insurance, mortgages or tax queries, we can put you in touch with our trusted partners and take the hassle out of contracting directly with clients.

Contact our friendly team today to find out more or talk to one of our team call: 0203 603 1878

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