Protecting Myself as a Subcontractor
I've been working as a Freelancer/Subcontractor for about 3 years. While I've had some direct clients, about 90% of the work I've done has been as a Subcontractor. During this time I've learned some painful lessons but in all, I've been very fortunate to subcontract for mostly descent companies.
That said, I have a question about what is considered standard procedure for subcontractors; and of course it deals with pay. While I've been fortunate to not work for anyone who pulls the "pay if paid" routine, the companies I've worked for have differing subcontractor payment policies. For instance, Company A wanted invoices on the first and third Thursday of the month and checks were cut and mailed the next day. Company B operated on a "pay when paid" policy but if the originating client hadn't paid by the 120th day the company would pay the invoice out of pocket.
While both way have their merits, the reasons for the differing approaches had more to do with the individual company's structure than philosophy. Company A is a web development company that has a more steady cash flow, so we could get paid more consistently albeit it at a lower rate. Company B is a 1 - man operation that does software development. So, while Company B pays more irregularly, they pay at an hourly rate that is almost 3X higher than Company A.
So, is there an industry standard or is the rest of the industry much like these 2 companies in that each Primary Contractor determines what works best for them? I ask because I've recently been approached by a larger company to do some subcontract work them. I just received a copy of their subcontractor agreement (for review, not signature) and though the wording is a little vague it appears that they too "pay when paid". If the industry standard is each company chooses for themselves then I don't want to press the issue. However, if there are some generally accepted standards that result in me getting paid sooner, I would like to suggest that route. I should note that this is a company that I've irrationally admired for a long time. So I definitely don't want to burn any bridges.