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How to compare umbrella companies – a contractor’s guide

freelancesupermarket.com newsroom

RSS 04 August 2009
There are literally hundreds of umbrella companies on the market, each offering their own ‘unique’ and ‘compliant’ service. The problem for most newbie contractors is how to decide which one to choose from with such a minefield of gloss and clever marketing to contend with.

So how do you compare umbrella companies? Well, I'm going to make this really simple for you. The only difference from one umbrella company to the next is the price they charge (their admin fee) and their standard of customer service.

I'm going to repeat that statement because I think it's important. The ONLY difference from one umbrella company to the next is the price they charge (their admin fee) and their standard of customer service. Customer service includes 'compliance' but more about that later.

Have you got that? Great, let's move on…

Using the admin fee to compare umbrella companies

Most umbrella companies charge in the region of £30 per week to process a timesheet. This varies from company to company but £30 is what you should be looking to pay. Anything less and you may receive a crappy service. Anything more and they're probably "having a laff".

Stick to fixed fee umbrella companies, steering well clear of any umbrella charging on a % of invoice basis (please see "having a laff" statement above).

Also, be very careful to check that the admin fee quoted is a GROSS figure. That is, the amount the umbrella company charges BEFORE they deduct tax and national insurance contributions. Some umbrella companies (not all, but some) will quote you a NET (or after tax fee) so make sure you use like for like figures when doing a comparison (i.e. Gross Admin vs Gross Admin or Net Admin vs Net Admin).

Using customer service to compare umbrella companies

This is a bit trickier to compare since most umbrella companies are going to feed you the standard "we have world class customer service" line.

Have a sniff around their website for things such as an online timesheet portal or whether or not they make free CHAPS (same day) payments to you. Pay particular attention to Professional Indemnity Insurance - this should always included within you weekly fee. If it's not, you should damn well ask the question why not!

After you've done your own due diligence, my best advice is to ask for a recommendation. I don't mean from someone at a recruitment agency (and certainly not from the agent that 'referred' you), I'm talking about an individual that's actually contracting right now and submitting timesheets through the umbrella.

Umbrella company league table

Once you've made up your mind, you could always take a quick look at your chosen umbrella's feedback competency scores on this website (excuse the plug but it's a bloody good feature!).

Now I did say earlier that customer service includes compliance, and as far as i'm concerned it does. What is umbrella company compliance? Well, conveniently for you the clever people here have posted a separate article explaining the exact definition so I'm not going to delve into too much detail. All i'll say is that working through a compliant provider is hugely important for both you and your agency so keep this at the forefront of your mind.

To summarise

It's hard making the right choice when looking for an umbrella company. What usually makes it harder is that most of the time you need to find one, sign up and then tell your agency which one you've chosen all within the space of an hour.

I hope you find this short guide useful. I guess it's now over to you. Go forth my friends and good luck. Oh, and by the way,…

The only difference from one umbrella company to the next is the price they charge (their admin fee) and their standard of customer service *.

* once again, customer service includes compliance.

Further Reading:

Contractors beware - not all Umbrella Companies are the sameUmbrella companies - another case of HMRC examinationUmbrella Companies cause HMRC to flex its muscles What Freelance Contractors Should Know About Umbrella CompaniesDoes your umbrella company take responsibility?Whats so special about 24 months? | Umbrella companies explained

Image: Comparing Yasmins by Saffy
© 2009 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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