back to article Unpaid tech contractor: 'I have to support my family. I have no money for medicines'

Your correspondent's inbox has never seen anything quite like this: I've received more than 50 personal emails from tech contractors affected by the “suspension” of payments by Plutus Payroll, an Australian outfit that pays tech contractors. Register stories get lots of comments, but this level of mails direct to a journalist …

Anonymous Coward

There but for the grace of god...

As a contractor myself, hence rather remaining anonymous, I can only say, "yikes" and I really feel for those guys. I'm with one of the mega-"body shops", so it'd take a heck of an upset for them to stop paying, but still. It's always week-to-week, so I always put something aside for reserves.

That said, in this day and age, with corporate layoffs on the drop of a hat, the advantages of job security but lower pay vs mercenary with high pay has shifted towards the latter. Meaning, you have true job security in neither, but as contractor you're at least pulling in the $$$.

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Anonymous Coward

Re: There but for the grace of god...

I count my blessings I was able to get established enough in my career to no longer have to deal with consultant gigs and got direct hired by a company I couldn't love more or be more loyal to (no layoffs except to companies acquired in its fairly long history). Boomers are really screwing over the millennials all around. Plus they are buying into this gig economy BS as well. Believe it or not there are still good companies to work for but they are definitely the minority and take some patience to find.

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Anonymous Coward

Re: Boomers are really screwing over the millennials

In my experience, it's almost the complete opposite.

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Why we love El Reg

I think this is superb. Sim using his contacts to help people who are in the poo through no fault of their own. Sims trying to dig through the said brown stuff to get answers.

Respect.

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Pint

Re: Why we love El Reg

Thanks El Reg!

I'm not affected by this, but I bet those that are are grateful for your help.

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Devil

"We have responsibly declined to suspend business activities due to our commercial dispute...

... which prevents us making payments"

That's remarkably easy to say when you're not the one who's not getting paid.

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Re: "We have responsibly declined to suspend business activities due to our commercial dispute...

The concept of "dispute" makes me raise my eyebrows. Back about 20 years ago I did the "contractor" thing (but on the engineering side of thing). I got out of that gig because suddenly there was a "dispute" and no one got paid. They danced like this for 2 weeks until it came out that the owner had cleaned out the accounts and headed off to a "safe" country. I do hope that's not the case here.

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Re: "We have responsibly declined to suspend business activities due to our commercial dispute...

The only people 'preventing' payments is the company itself. The doublespeak about 'sorry to see you go' etc is a standard prelude to 'we have already spent your money mate'.

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Re: "We have responsibly declined to suspend business activities due to our commercial dispute...

"I got out of that gig because suddenly there was a "dispute" and no one got paid"

It's very commonplace. I started out as a contractor, because at the time if you got into IT where I was in the UK you more or less had to be - permanent jobs were only ever offered to people who'd been contracting for a company for ages (long enough to plausibly sue for employment rights). And yeah, there's a couple of dozen jobs that I simply never got paid for - including ones from massive, big-name companies who could easily afford it but simply elected not to pay me for 2-3 days work because I was unlikely to take it to court for a few hundred quid. Hell, one time, a local NHS hospital failed to pay us due to office politics between our boss and our boss's boss. Nothing we'd done wrong - just one dilbert trying to screw another one over.

That's why I gave up on contracting as soon as I could.

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Re: "We have responsibly declined to suspend business activities due to our commercial dispute...

At hey have headed off to the big house!!

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The wife is a contractor and the national retailer for whom she works regularly screws the payment and she finally gets the cash weeks after it was due as the accounts department mainly employs zombies from Shaun of the Dead.

As a result she keeps a good reserve as I thought was the case for all contractors? It's a bad situation to be in and they have my sympathy but I thought all contractors keep some cash in reserve for situations like this?

PS in case you're wondering, she stays working there as they agreed to part time hours that work for her and it's 5 mins from the kids school. Some months they do pay on time. Even if it's not the right amount!

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Cash in reserve

Depends how long you've been contracting. When I first went self-employed ( jumped ship before company went bust), it took me a month to get a few bits of work. Invoicing terms are 30 days, often paid late.

That means I was 90 days behind on income. I was fortunate in having savings and a wife with regular work. Not everyone is in that position (through no fault of their own). Even with the higher pay, it takes the best part of a year to be 'up'.

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Pirate

Re: Cash in reserve

"Invoicing terms are 30 days, often paid late."

yeah, and if you get unlucky and have a couple of "non-paying" customers at the same time, it complicates things a bit more. can happen. And yet the work is still there. So what do you do? Well, sometimes it means taking out a loan, and smiling, and doing the work, as long as there's a good chance of getting paid for it down the road. It's the world of contracting and business in general... Especially for freelancers and privateers.

yeah when you sign BOTH sides of the check, you find out a lot of things that most wage slaves don't know about, from payroll taxes to getting customers to pay up.

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Re: Cash in reserve

"It's the world of contracting and business in general... Especially for freelancers and privateers."

For some years, I have been sub-contracting from large companies, on frame contracts with European intra-governmental organisations - they regularly pay from three to six months late. On the other hand, these are lucrative and long term contracts.

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So,exactly the same situation as when thousands of claimants don't get their jobseekers payment,but you never,ever see those stories mentioned anywhere,but as soon as it starts to happen to a few well paid folk in aus,who should have contingency savings(impossible and illegal on usa) it's suddenly news..

Cant say I have much sympathy for them,now you know how billions of poor people get treated all the time..

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Anonymous Coward

Now, now ...

"So,exactly the same situation as when thousands of claimants don't get their jobseekers payment"

This is conflating two issues. I'm well paid and reasonably secure but it doesn't mean I lack sympathy for those who are pissed around by the government (jobseekers) or those who are pissed around by their umbrella company (as per TFA). When you have higher income, you generally have higher commitments: there's stress at both ends of the scale.

There is no moral duty to have savings, and with interest rates of approx 0%, perhaps it's not even that financially sensible. There is a moral duty to pay people for doing work --- and the smaller the entity, the stronger that moral duty is: I worry less about being late with my water bill than I do about being able to immediately pay my gardener, for instance.

The trouble with "Cant say I have much sympathy for them,now you know how billions of poor people get treated all the time" is that it looks like the politics of envy. These contractors are still working for a living and should be paid the market rate for that work. Basic compassion should tell us that they are in a very difficult situation without us having to immediately go for the "fallacy of relative privation"

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Anonymous Coward

It is possible to feel for both.

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"It is possible to feel for both."

Of course it is. There are those who'll call you a champagne socialist for it though.

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WTF?

Re: Now, now ...

"There is no moral duty to have savings, "

Of course there is a moral duty to have savings. It follows from the moral obligation to be able to provide for your family.

Even though my job is pretty secure I maintain a minimum of three net monthly wages as an absolute minimum of readlily available savings (i.e. not tied up in stocks or bonds).

And I am not saying you can build up such a reserve overnight, it takes some time and mainly financial discipline.

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This is a bloody awful attitude.. If it was not for all those hard working contractors THERE WOULD BE NO BENIFIT paymanets to ANYONE!

We create the cash, the government ( who have bugger all to do with creating the cash ) takes a portion and gives it to people that dont work and watch Jeremy Klye all day.

You should be on your knees thanking us for working so hard!

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I lack sympathy, somewhat.

Either you have a contract with that company that they'll pay within a certain time, and you should be working to the maximum of that window. Or threatening them with collection if they don't pay on time as per the contract.

Or you have a contract that doesn't say a word about payment schedules, which means you have almost no fallback without going to a court and proving they were unreasonable (which will cost you more than it's worth).

Though they haven't declared bankruptcy, a "commercial dispute" could easily mean their suppliers have turned off all their IT because they haven't paid, or the bank has shut their account for similar reasons. Just because they haven't declared bankruptcy YET doesn't mean they aren't in serious trouble. Especially if they can't tell you what's happening.

But, this is the risk of self-employment, which is more an opt-out from all kinds of employee and income protections (which still don't save you if you the company goes bankrupt, by the way!). There's a reason you "get paid more" - because you need a reserve of cash, have to fight your own battles, etc. which employed people get paid for them.

Yes, I've been self-employed. For 10+ years. Made a good living out of it, and I gave it up not for any reason relating to not being able to live off it, or being screwed over (I never used an umbrella company, though, but also never had a non-paying client - because a non-paying client isn't a client, they are a debtor). But if a client doesn't pay, you stop working for them and move on. If your umbrella company doesn't pay, you do the same. Pretty much, the excuse does not matter.

In fact, being self-employed, are you not perfectly able to approach your clients direct and ask them to employ you through any other umbrella or even directly? I'm not guaranteeing they'd even consider it, but if you're any good, they'll be glad to hear it surely? And if not, that's the price you pay for freedom of employment like that.

When you choose to opt out of being tied to particular company, client, job, task or obligation that you don't like, this is your price to pay for that flexibility and freedom - though nobody deserves to have their money withheld.

However if you want that freedom and then go back and tie yourself into a company to get the amount of work you need, surely that's the worst of both worlds - absolute reliance on a company that has no obligation to push any work your way? And to not have sufficient reserves to tide you over that is unrelated to self-employment at all - it just means you've not saved for ANY eventuality.

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Anonymous Coward

Re: I lack sympathy, somewhat.

I'm not going to comment on financial reserves - not all contractors make out like bandits.

However, all contractors need to really read the contracts they sign before signing up with one of these outfits.

I've recently had to spend an entire weekend poring over a 23 page (boiler plate) contract with some truly remarkably clauses. My objections & feedback ran to 2 1/2 pages.

I have a funny feeling that a lot of people who contract with the agency I'm dealing with have probably just signed the damned thing and have no idea what they've just done.

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Re: I lack sympathy, somewhat.

"this is your price to pay for that flexibility and freedom"

Flexibility and freedom??? Listen to the person who has no idea about the subject they are talking about.

I work alongside people who are "contractors" because they cant get any decent full time jobs.

They are FORCED to either become self employed or go through a payments company. the alternative is a lackluster job on close to the minimum wage for qualified technical work.

I don't see any flexibility and freedom for them, I don't see them earning enough to be able to handle a week without income let alone a month or 90 days. I do see them doing the shitty jobs and taking crap from managers that a "full time" employee wouldn't dream off.

Even people slightly higher up the tree who contract hate "bank holiday month"

They are the NORM when it comes to contracting (at least in the UK, I cant see if the person i am replying to is from here, to be honest, his wall of text and total lack of any empathy reads like the daily mail,so I guess he is)

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Re: I lack sympathy, somewhat.

So it's either they can't handle a single week without income and thus risk debt and maybe even bankruptcy (or literally not being able to go into work the next day!), or they have to accept lower monthly wages spread over a year with longer guarantees of employment in a job they don't enjoy?

Isn't that simple economics? I cannot walk out the door without it immediately impacting my next employment, but equally my employer can't kick me out without justification and consequences. Self-employment is exactly the opposite of that. I didn't say that either situation is nice, but they VOLUNTARILY opted-out of the guarantees because they don't want to work the lower-paid jobs. Per-hour they earn more, but they have VOLUNTARILY gambled that they won't break their leg, lose their car, get a sudden bill, or be paid late. That's NOT a sensible position for someone who is being "forced" to do that in order to earn a living, and especially not if you have no backup plan.

If you have no money, can't get a job, and the options are "go self-employed" or "take lower money", then you have chosen to go self-employed at risk to yourself and your family. Sure, you can say "but we couldn't survive on the lower money" but - guess what - it means you CAN'T SURVIVE on the higher money either, should ANYTHING go wrong. That gamble was a conscious choice, the overall situation is still no better on average.

Not only that, getting loans, mortgages, credit or even jobseeker's allowance is a lot harder if you're in -

or have come from - self-employment. There's a reason for that. Those places know your income is much more likely to be unpredictable. I was once refused a mortgage when regularly self-employed by a set number of long-term clients while earning TWICE what I was earning when properly employed (when they did grant me a mortgage without batting an eyelid).

Yes, I'm British. And I have been in this exact position you describe. That situation is a no-win, it has nothing to do with self-employment.

And I have consciously chosen - after a career in self-employment straight out of uni - to go to normal employment for many good reasons. And one of those is precisely this: When faced with the gamble, you can't guarantee it will pay off, even if the alternative situation looks worse than you can afford to take.

Hey, you have no money? I'll pay you £500 a week. Or £1000 a week but only if you spin heads on a coin - spin tails and you have to work that week for free. The offers are mathematically equivalent. If you "need" £700 a week to cover costs, can you ever really win on either option? No. One run of bad luck and you're stuffed and won't recover.

And especially if you have no savings, you cannot afford to take the gamble. Even if it's "your only option" and "forced" onto you.

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Re: I lack sympathy, somewhat.

Lee, you are talking as if the vast majority of people have a real choice.

Ie that there are jobs for them to talk into if they choose not to work as a "contractor"

There are not

Thus there is no choice.

Contracting is fine for people like me, but then there is a world of difference between what I class contracting and what these people are being forced into

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Re: I lack sympathy, somewhat.

And especially if you have no savings, you cannot afford to take the gamble. Even if it's "your only option" and "forced" onto you

It's that or Starve / get kicked out of the country and then starve! Often the crap cake comes with some Icing on Top: You must contract via the company preferred staffing supplier - run of course by some family of the board or crony insiders, which will be skimming off both ways.

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Meh

Re: I lack sympathy, somewhat.

"Thus there is no choice."

there are always choices. fate is what you make it. your choices might be limited by circumstance, but you can always make a choice.

In the circumstances you describe, the RIGHT choice just might be "re-location" or a career change.

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Orv
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Re: I lack sympathy, somewhat.

In the circumstances you describe, the RIGHT choice just might be "re-location" or a career change.

Both of which, inconveniently, require money.

The last time I switched jobs I spent over $3000 on moving expenses, all out of pocket. The time before that, $5000.

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Re: I lack sympathy, somewhat.

"there are always choices. fate is what you make it. your choices might be limited by circumstance, but you can always make a choice.

In the circumstances you describe, the RIGHT choice just might be "re-location" or a career change.'

If all other choices lead to "death by starvation," then they can't really be considered choices owing to the survival instinct.

And moving and/or re-education presents a Catch-22. Basically, you need money to get a better job, but you need a better job to get the money you need. And many are already working every waking hour (and then some) just to make ends meet, and yet some of them STILL have to miss a few meals. Can you say, "All work and no play makes Jack a dull boy"?

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In the UK if something like this happened then you'd simply stick a case into the small claims court or otherwise do a statutory demand, whereby you show that the money is due (your invoice, and lack of payment) and they then have 21 days to either pay, or prove in a court of law that the invoice is not due. Failure to pay after 21 days means that you can have the company wound up for insolvency, or an individual declared bankrupt. Can't you do that in Australia?

Excuses about "well, we have a dispute" is not a legally valid reason for lack of payment in the UK.

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Similar procedure in Sweden - "Kronofogden" would be right on their ass and rightly so.

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value of invoice and tim einterval

To get a semi-automatic small debts court paper started, try to keep invoices below GBP £5,000. and invoice period at a maximum of 14 days. This allows an internet claim for small debts action to be made. It means your terms must include your ability to invoice when any debt due for work done is over GBP £4,500.

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Anonymous Coward

Actually believe the same is true in Australia, they do have an equivalent to the Small Claims system, as does NZ.

Biggest issue might be the level of claims, most contractors fees would exceed the maximum amount claimable under the SC system, limited to the $1-2-3,000 or so maximum (varies by jurisdiction).

Class action of some sort might be the way to go, if one can contact others in the same boat.

Should be noted, that as unfortunate as this is, it is relatively rare; most contractors get paid as agreed all the time. Bad payers get a bad reputation very quickly.

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Re: value of invoice and tim einterval

The UK small claims limit has been increased to GBP £10000.

https://www.citizensadvice.org.uk/law-and-courts/legal-system/taking-legal-action/small-claims/small-claims/

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LDS
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Hail the new corporate overlords...

... that wants everybody to be a self-employed contractor...

Been there for ten years, but always preferred to manage contracts directly. Far easier to spot issue (and ensure pensions and the like were paid), although the bureaucracy behind can drive you mad (and you sill need to pay a fiscal expert for the most difficult stuff).

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New Icon please

I suggest this before, but I want a 'Scumbag Corporation' icon (perhaps the Scumbag Steve hat)

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Re: New Icon please

No, a $cumbag in a $uit (I include the $ because they should also have $ in their eyes).

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How it made money is therefore a mystery...

My guess, from sitting on the float.

Handling payroll is something that can be highly automated so the cost base is tiny. At 1,000 contractors they'd have several million AUD coming in every month. If they can sit on that for a week or two (especially if deductions can be held for a while before paying) you can make a nice little chunk off the interest.

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Re: How it made money is therefore a mystery...

And when they have a bill they can't pay, they just need to sit on your money for another week to pay it.

Sounds suspiciously true.

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Anonymous Coward

Re: How it made money is therefore a mystery...

Let's say $100,000 per contractor for argument's sake / 52 weeks * 1,000 contractors @ 5% interest / 52 weeks. So I make it that holding everyone's money for a week in a better than market average account would get them less than $2,000. Given a realistic business account interest rate.... more like $200.

So I doubt they're going to retire off the profits any time soon.

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Anonymous Coward

Re: How it made money is therefore a mystery...

Possibly the entire scheme has been knackered by low interest rates?

So they've been sitting on the tax money for just a little bit too long, or started using it for riskier investments, eg: backing horses.

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@ 5% interest! Re: How it made money is therefore a mystery...

Do tell me where please?

0.5% or even 0.05% on instant demand accounts is common nowadays!

Also they are probably only sitting on the money for a handful of days each month.

So still a mystery to me.

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Re: How it made money is therefore a mystery...

As much are people are suggesting there's some suspicious or dubious nature to the way the business worked, that it looks 'too good to be true'; it does seem to have worked quite well until they were bought out and new owners took over.

The company seems to have been fairly open about the way they raised revenue and could provide services for free; mostly by offering and promoting other paid-for services to their customers, and it seemed, surprising as it may be to some, it was a viable business model and worked reasonably well.

Then the new owners arrived.

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Anonymous Coward

Re: How it made money is therefore a mystery...

There was a Yes Prime Minister where they discussed fraud - "usually it's just a chap who gave himself a short-term unauthorised temporary loan from the company's account, and invested it unluckily. You know, horse falls at the first fence, that sort of thing" ....

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Anonymous Coward

Re: @ 5% interest! How it made money is therefore a mystery...

It's called Treasury. You're thinking of savings accounts.

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Re: How it made money is therefore a mystery...

THIS.

If I could get 52 millionaires per year to lend me $1,000,000 for a week each, set up sequentially, then I can continually earn interest on the money like I had a million dollars!

This is the way my credit union is able to offer me a free checking account... they make interest off of my direct deposit and money in the account.

If I can hold onto 1000 contractor's salaries ($2000 per week each) for a week at a time, then I essentially can pull down the interest on $2 million a year.

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Well, in the Oz press, it seems that when an investment corp brought Plutus in March, 3 top execs left to startup their own payroll company. What's the betting, at least one of them was a signatory for the bank account Plutus uses?

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Sounds like a plausible theory to me.

Wonder if that company has started emailing Plutus' contractors yet? Hmm...

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@Alien ... no fear...

Sorry, but no.

When they sold the company they transferred the assets to the new company so that the new folks would be signatory for the bank account.

The issue is that the new owners appear to be shutting down the 'free' system.

As a contractor here in the US. I can tell you that if you want to succeed, you need to build at least 6 months of reserves and then some. You also need to maintain your skills so that you can get billed out for top dollar and do things that may not directly make money but also add to your brand.

Not sure how this would translate to the US.

The 'contractor' is an employee of said company (Plutus) since Plutus has to track payroll and pay the government (taxes/pensions) for the employee. The reason I say that they are employees is that Plutus would have to W2 them and not just issue a 1099 where the contractor will have to deal with the withholding, taxes, SS, etc... on their own and they could easily incorporate (S-Corp) and bill the client directly.

Thanks to Microsoft, independent contractors have to show multiple clients and can't stay at one account for more than 2 years. (Captured Employee BS...)

But I digress... back to your point...

More than likely they wanted to shut this arrangement down because while they offer the service for 'free', they could have made money by keeping the interest gained on the sweep accounts. (They are holding the money for a period of time. Think of it as a 30 day float or less.)

They also could make money by also selling contracting services and make money from the spread between what they paid the contractor and what they charged for the service.

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Anonymous Coward

"What's the betting, at least one of them was a signatory for the bank account Plutus uses?"
After winding up my contracting business I went to work for a small start-up company with three directors. One of the directors was in charge of the business, one lived in the same city and one was overseas. I discovered that the director in charge was trousering a significant proportion of the business income and failing to keep proper records. So I reported that to the other directors who immediately sacked him.

Problem was the paychecks needed two signatures so we went without pay for a time until the overseas director could arrive.

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