Subcontracting |Should you work under subcontract?

Subcontracting tends to be common in the world of consulting. Whether you’re the subcontractor or the person hiring others for subcontracting, you’ll run into outsourced outsourcing at some point. But some consultants shy away from working for other consultants. That’s because some consultants seem to think that they need not pay till their client has paid them. And that’s a situation you want to avoid.

When you’re hired to do a job, your pay should be contingent on fulfillment of your own contract. A deposit to get the project rolling and payments at key milestones. No matter who’s hiring you, you should be paid according to the terms of your contract. Don’t ever let a client tell you otherwise.

Some clients (usually other consultants who’ve hired you as a subcontractor) will try to say that they haven’t been paid by their client, so they can’t afford to pay you. This is dead wrong. They’re obligated to meet the terms of their contract with you. Think of it this way. If you hired someone to plumb your basement, would they give you a few more weeks to pay, just because your employer delayed your latest pay cheque? Would your credit card company let you have a few weeks more to pay? No way. They’ll either demand payment right this minute or they’ll charge you a high interest rate.

If you are willing to extend credit, make sure your contract specifies the interest you should be paid. Stop work until you’ve been paid for any overdue invoices and interest charges. Don’t let other companies turn you into a line of credit. If they want the perks of hiring subcontractors, they need to set aside money to pay their subcontractors. (If they were smart, they would have got a deposit from their own clients upfront, so that they’d have cash to pay you in a situation like this.)