IT contractors lose thousands as 2e2 collapse hits recruiter Tech-sector freelancers are thousands of pounds out of pocket after the collapse of IT integrator 2e2 wiped out recruitment agency Populo Resourcing, The Channel can reveal. The contractors, recruited by Populo to work on various IT projects for 2e2, had their work cancelled days after the integrator crashed. Some say they are …
Its scary how a company (2E2) that on the face of things (over priced rip off scams) can have had so much impact on the infrastructure of this country.
From councils paying well over the odds for supply of services to recruitment firms allowing them to have debts of 1.3 mill
Is it E2E's fault? or more a sign of terrible management and laziness on behalf of the big companies that dealt with them?
It's 2E2's fault.
When a company owes you (as a company) money you have several choices.
You can cease all trading with them and take the enforcement route to get your money. The problem with this is that it doesn't help you (or them) since you now have to go through the sometimes costly process of finding somebody else to fulfil whatever it was the original company fulfilled. You will also end up being criticised for putting all these small businesses to wall through your heavy handed tactics. You might not even get your money back becuase you have put them out of business before they had a chance to recover.
Alternatively, you can recognise that most companies go through bad times and extend them a bit a credit (based on previous dealings with them) and leniency when it comes to paying their bills. The advantage of this is that it is good business and most companies that go through hard times do actually recover so you don’t lose out. It also means that should you have temporary difficulty other companies will be more likely to be lenient with you. The disadvantage is that you don’t know how much they owe others or they might not recover so you could end up losing your money.
When a firm that owes you money goes titsup, there are several possible positions you can find yourself in.
The first and most important thing to understand is that the liquidators have the sole objective of keeping the banks happy. This is the most important business relationship in their world and you aren't even on the same planet.
If you're in the position where they want/need you to do something for them, they may well say something along the lines of "if you help out here, we will help you get more of what you're owed".
This is what the late great Guy Kewney called an "industry standard lie".
There are simple rules for who gets which money in what order, the beancounters have very little discretion and as above, their algorithm is to draw in as much money as they can for the bank and then stop.
These people are *obliged* by law and their management to shaft you.
Typically they will go for a "pre-pack", basically they may well have already set up a buyer for some fragment of the business that is viable, so as to get the last few quid for the banks, do not feel under any obligation to help the successor outfit unless it has a clear, contractual (in writing) payback for you.
That means if they want something from you, such as help sorting out the mess, then this must be done on a separate chargeable basis to the bad debts you have incurred.
Of course this is different to your relationship with the client, it's not their fault and of course they are the most obvious source of future revenue, so you need to start that discussion soon.
Even in abridged form the accounts didn't make for good reading. I am no expert, but if you have debtors of 1.8 million up from 700k the year before yet your worth is only 50k and that didn't increase from the year before then it isn't going to take much to wipe you out. Especially as you are only filing small accounts so have a turn over of less than 5 million, indicating your debtors owe for longer than 100 days...
I would guess that they were paying the contractors before getting the money from E2E. I know of many companies who only pay 30/60 days after receipt of invoice, which would mean the contractor getting paid at the end of say June for the work he/she did in April. Now you may be happy to work for 3 months without seeing a penny, but I certainly wouldn't so the agencies have to pay the contractors before they get the money from the clients. This is one of the ways that agencies actually earn part of their fee.
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