Several of the less reliable agencies have stopped paying their contractors and gone into administration. They then transfer their good contractor assets to a new or existing company and keep trading – but without their debts.
Some contractors have been saying that it is likely to happen now that the economy is recovering and the IT jobs market with it.
However, as we’ve seen with Aristotle Corporation, the opposite could be true.
Agencies who are heavily saddled with debt from the downturn, which is restricting their chances of future growth, may be tempted to dump that debt with the administrator and then buy the best contractor assets off of him at a much reduced price.
The directors of Chamberlain Scott paid only 95K for the assets of the company from the Administrator.
Of course, many of those companies with debts might not consider it ethical (even if it is legal) to simply dump their debts to contractors – even though it would be really tempting financially.
However, there are a number of people in the industry who are less ethical than others and who may find that this is a good solution for dumping their contractor debts and starting afresh with just their juiciest contractor and client contracts and no debts.
Contractors seldom do a financial check on agencies when they sign on the dotted line. They are going to do more of this in the future – or risk several months’ money.
In the past our readers have asked us to compile an agency blacklist.
We feel it is better to compile an agency whitelist – and in the strict area of Financial Health rather than any other criteria as that is most important.
We have already started one on our Contract Search page here –
Any agencies who feel that they have a good balance sheet should contact us to get their names added. What we need is their last set of accounts to make judgments on areas like profitability, Net Assets, Cash and especially Debt.
Contact us at ITContractor