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Contracting: is it better to work directly or through an agency?

So you’ve decided to go self-employed, congrats! While you’re probably excited at the prospect, we know it can feel a little daunting too. Being your own boss can feel very liberating but it also comes with a lot of responsibility such as managing your own invoices and doing your own taxes.


When it comes to sourcing work, this is your responsibility too, but as a contractor, you do always have the option to use a third-party agency to help you find those shiny new clients. There’s been a lot of debate about what the best way to approach sourcing new work is, with some believing it’s better to go directly to the client, and some believing working with an agency is the way to do it. But what’s better for you?


We’re here to help break it down so you can make an informed decision that will ensure your Indy business is booming and that you’re landing those aligned clients that you love working with. Here’s three things to consider when choosing whether to approach clients directly or use an agency.





Sourcing new clients/work


The way you choose to source new work can depend on a number of things, and often those who have been contracting for a while may choose to source work directly with clients once they’ve been able to build up a network that provides them with the right connections.


However, if you’re new to contracting, the benefit of using a third-party agency is that they will have access to a number of potential contracts for you that you wouldn’t have otherwise known about. The possibility of landing much bigger contracts and a wider variety of work may mean you decide to work with an agency at some point during your time as a contractor.


Make sure you know what you’re getting yourself into! Whether you choose to work directly with an organization or through an agency, there will be contracts and small print. Once you’ve agreed to a contract through a third party, if you’re not all that keen on the intermediary, it’s unlikely you’ll be able to ditch them. Often agencies will have what can be referred to as a “handcuff” clause, which prohibits you from working directly with the client within a certain time frame.


Payment

The great thing about self-employment is that you set your own rates and are very much in control of what you earn. When you work directly with a client, you have the opportunity to negotiate your rate and how and when you get paid – whether you charge an hourly rate or a set fee for a project, for example.


When you work with an agency, your rate is still controlled by you, but it is the third party who will take the responsibility of negotiating how and when you get paid for the contract. This can have its upsides if you’re new to the contracting world and still feel a bit nervous about money talk because you can be clear about your terms with the agency who will then convey this to the client. On the other hand, some seasoned contractors believe they can strike much better deals when they are able to negotiate directly with the client.


Again, if you’re new to contracting this can sound appealing while you learn the ropes and become more confident, but it’s important to remember that as with any HR agency, there is often a fee involved for their services, on both ends. Agency fees are something you’ll have to factor into your overall earnings and expenditure, to consider whether a contract is worth your while.


Collaboration


For most, the appeal of self-employment is the freedom and autonomy that comes with the way you work, and part of the learning process when you just start out as a freelancer or contractor is how you build and manage relationships.


Some may see it as a double-edged sword, but when you work directly with clients, you are wholly responsible for maintaining the relationship with your client, from sourcing the contract to negotiating, commencing work, and settling payment at the end. While this comes with more responsibility, it does mean that anything you earn goes into your pocket and you have greater transparency around the contract as a whole.


When there’s a third-party involved, they take on the responsibility of maintaining the relationship and negotiating the logistics and formalities, meaning you’re not likely to have much, if any, contact with the end client at all. And as mentioned above, for this you’re likely going to have to part ways with an agency fee.


While working with an agency may seem like the easier option, on the whole, it’s important to consider all of the factors when deciding how you want to work. You have decided you want to be your own boss after all, and you may try out both at some point in your career, but it’s good to go into each potential opportunity with all the facts so you can pick the most aligned way of working for you.


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