Umbrella companies in the recession

[The SMG]

Originally Posted by curleyted

I've noticed that there are a few umbrella company representatives on here. I had a thought the other day - as the recession is finding bad companies wanting or straining the cash flows of even viable companies, is there any danger of umbrella companies going bust? And what will happen if they do?

Is there anything I can do to protect myself from this?

I understand that there's uncertainty in the economy (unless you've been on the planet zog for the past 12 months so will you). From a cash flow perspective, I really don't see how Umbrella Companies should have a problem at the current time. Correct me if I’m wrong, but I thought Umbrellas only pay Mr Contractor when they receive the money from the agency or client. If this is the case, why would they need to get into debt or cash flow difficulties?

SMG

[UKFF Mod]

Hi all,

The above was posted in response to the current thread in our 'Ask An Expert' section (see here)

As that section is more a question and answer area as opposed to a debate forum (the board rules for that section state this) I've moved the post here so that you all can continue the discussion.

How secure do you think your umbrella is? How can you be sure? Do you think that the recession will cause any problems whatsoever for such companies?

[dodgy_Dave]

I hope none of them go bust. I'm sure I'll be the first person the contractor phones.

Be warned: if your umbrella company does go bust that's who we have a contract with! You might think it's a low risk option but not all your funds may be safe.

[JeffreyC]

Originally Posted by The SMG

I understand that there's uncertainty in the economy (unless you've been on the planet zog for the past 12 months so will you). From a cash flow perspective, I really don't see how Umbrella Companies should have a problem at the current time. Correct me if I’m wrong, but I thought Umbrellas only pay Mr Contractor when they receive the money from the agency or client. If this is the case, why would they need to get into debt or cash flow difficulties?

SMG

I suppose the overheads could do them. I think a lot of umbrella companies operate with minimal staff and a small rented office but if they were struggling to pay wages you might find your invoice goes to that first!

I also know of some that advance your pay.... this is surely itching to cause trouble

[The SMG]

Originally Posted by JeffreyC

I suppose the overheads could do them. I think a lot of umbrella companies operate with minimal staff and a small rented office but if they were struggling to pay wages you might find your invoice goes to that first!

I also know of some that advance your pay.... this is surely itching to cause trouble

Pay advances???!!! Give me some of that, I spent about 7 months working through an Umbrella (back in the day of course) and nobody ever mentioned pay advances! The way I see it, provided the Umbrella runs a tight ship and doesn't go crazy on marketing (or pay advances!), there's no reason why they all shouldn't survive.

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