The sheer weight of telephone traffic between us and clients over Contract reconciliation issues and Standard Monthly Payments (SMPs) convinces me we are in the grip of more than just one or two over zealous Account Managers. Recently we ran a successful Internal Review over the issue and have a couple teetering on the brink of this option. We are also helping a larger number work out the sums.
Whilst firm specific points always arise in these negotiations - exceptional circumstances, idiosyncratic billing patterns and future forecasts and so on, certain common factors persist.
Top of this list is the issue of what percentage the contract should be reconciled to. Now this goes back to the very beginning of contracting when the concept of an advanced payment for work yet to be done was established. Alongside this were marketing promises such as how this new approach would provide stable and predictable income allowing for solid financial and business planning. It would also offset the less work in progress friendly nature of CDS billing. Indeed I remember someone high up describing this as an "interest free loan".
Well it now seems as if the bailiffs have been set loose!
Our understanding was always that contracts should be reconciled to 110%. That is if your contract is for £110,000, and it is reasonably predictable that you will report £100,000 at the end of the contract period, your SMP should not be amended. Indeed the Criminal contract states that they will only make amendments to SMPs when your reported work drops below this threshold.
The LSC however, in such negotiations, now consistently attempt to reconcile to 100%. We have had the argument many times in many different guises (especially to suggest that this is not the case in civil) but usually reach some reluctant accommodation with them - most often compromising on 107.5%.
Given that there seems to be a national push aggressively to reconcile the current contract period at 100% underway you should perhaps be aware of this in your negotiations.
If you want further help just give Andy or Steve a ring!!