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Recruitment International Audit and Compliance Pay When Paid Contracts Lynn Mildner – Towergate Credit 5 th March 2013.

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Presentation on theme: "Recruitment International Audit and Compliance Pay When Paid Contracts Lynn Mildner – Towergate Credit 5 th March 2013."— Presentation transcript:

1 Recruitment International Audit and Compliance Pay When Paid Contracts Lynn Mildner – Towergate Credit 5 th March 2013

2 Pay when Paid Contracts Introduction Acronyms - Terminology What are “pay when paid contracts”? Why are they an issue? Steps forward? Pitfalls

3 The Acronyms GPS – Government Procurement Service RPO’s – Recruitment Process Outsourcing companies MSPs – Managed Service Providers APSCo –Association of Professional Staffing Companies ABFA – Asset Based Finance Association ABL – Asset backed lender

4 What Are Pay When Paid Contracts? Used by RPO’s, MSPs or “master vendors” Agency supplying staff will not be paid until a third party has paid them Often “in full” No end stop date No contractual relationship with third party No protection against third party insolvency

5 Why does this matter? Staff are paid with no income from contract Often no impetus to speed up payment from end client Funding - Invoice discounters/Factors Credit Insurers contractual principal/risk CASHFLOW

6 The Construction Industry Latham report and 1996 Housing Grants and Construction and Regeneration Act Assumed to have outlawed pay when paid, Gives legalised framework - applied when third party insolvent No model for reform of recruitment industry Not reliant on cash flow funding

7 Progress– Apsco Code - Summer 2012 Pay, or allow contact with third party by given date Most ROPs and MSPs sign up to new code GPS committed to eradicating pay when paid contracts between agencies ABLs cautiously continue funding agencies BUT Beware the re-factoring date

8 Pitfalls Refactoring - c.123 days outstanding - deducted from new funding Credit Insurance – principal/overdue reporting/claim failure Double funding – the ABL dilemma. Funder £2200 RPO £1200 Agency- £1000

9 Future Trends? Self Bill – the back door to pay when paid? Bill when third party pays Credit Insurance – Self Bill endorsements specify “bill by” Contracts - Dates must be reflect credit insurance/ funder agreement Invoicing period Credit period

10 Further Information Lynn Mildner – Business Manager Towergate Insurance - Credit 77 Leadenhall Street, London EC3A 3DE


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