What if the umbrella blows inside out?

If you are a contractor and are part of an umbrella company it is important that you know what to do if it goes bust.

Rob Crossland from Parasol, an umbrella solutions company, has spoken on the matter to help contractors with the impact of an umbrella company going under. Crosslands main piece of advice is to cut your losses and get out. It is important if you fear that the umbrella company is going under to limit the impact on your financial situation.

Crossland has said that, “When an umbrella solutions provider goes bust, it is usually because the business has run out of cash. So it is unlikely that contractors will ever see any monies owed, simply because there won’t be the cash in the failed business to pay them.” If an umbrella company is about to go under there should be warning signs. As a contractor it is your job to look out for them in order to protect yourself.

Here are a few signs;

• If a deal looks too good to be true, chances are it probably is
• Late payments
• Non-payments
• Lack of response to payment related queries

You can switch your umbrella company straight away if you fear that there are difficulties. Don’t wait to be told officially by the company because at that point it is too late. As Crossland says. “by acting swiftly, the contractor will have lost only a single week’s or month’s money, and some agencies may actually pay twice to avoid any issues with the client.”

As Derek Kelly from ClearSky, an accountancy firm, has said, “When an umbrella goes bust, it is usually very quick and very messy, so contractors who take steps to mitigate the impact and move on quickly will minimise their financial loss.” Make sure you are not the last to know!