Starting off as a freelancer is an exciting adventure with lots of benefits but it’s not without its problems. One of the biggest is how to keep your cashflow running smoothly so you can pay your bills on time and pay yourself of course.
The following tips might seem like obvious steps to take when you are looking after your own business and personal finances as an individual, but you’d be surprised how easy it is to slip behind with payments to suppliers, or keeping on top of all of your bills month to month.
So here are 5 tips to stay on the financial tightrope as a new freelancer:
Put Money Aside When Times are Good
It is so easy to get giddy with excitement when the times are good and the work is flowing in; even better when your clients are regular and good payers. These are the times we all aim for as freelancers and treating yourself, friends and family is tempting to us all. Of course you should treat yourself when times are good but it pays to be cautious in the long term. At some point there will be lean times so ensure when you have got plenty of work flowing in that you put aside some spare cash.
It could come in incredibly handy on a rainy day.
Keep Things Simple with a Spreadsheet
Get into the habit of putting everything into a spreadsheet. From all your financial ins and outs to client details and any invoices you send out or receive. Also ensure you regularly back up this spreadsheet in the event of a stupid error that everyone and anyone is prone to from time to time, no matter how intelligent and smart they are.
Don’t Get Behind on Your Tax & Bills
Another simple piece of advice that seems too easy to forget, but you’d be surprised how easy it is to defer on a payment of a bill when you’ve got a million and one things on your mind. Set up direct debits for any monthly bills you have to pay out from your business account and stay on top of it from the very beginning – it’s a good habit to get into. It only takes a build up of a couple of months on an account that needs paying for it to have a negative snowball effect on the rest of your finances.
Build a Relationship with Your Bank Manager
Setting up a business account should be a priority even if it’s the first day of your life as a freelancer. It immediately splits your personal and business finances, keeping things nice and clear for you. Building a relationship with your bank manager could be crucial in the tough first few months of your freelancing career and if you are unfortunate to go through lean times and require assistance. If you get on well and you show you’ve been a good customer they are more likely to be flexible where possible in your hour of need.
Enjoy the Flexibility but Remain Active
Most of all enjoy yourself and the flexibility that freelancing allows you. Most freelancers have gone into it to get away from the daily grind of the commute and the office environment. We all appreciate that times might be tough financially at times, especially when first starting out but remember that you now have the flexibility that you don’t have in a regular 9-5 office job. Get into the right habits with your finances from the outset and you should see yourself right.