10 ways to keep on top of your finances

Posted on: September 10th, 2010

One of the things that can make a freelancer’s life tricky is the whole  issue of  money – and cashflow in particular. We don’t have a regular pay cheque paid into our account on the same day each month and all too often clients are far too slow in paying us.

You might have billed several thousand pounds last month but it’s lying in your clients’ bank accounts and not yours.

Here are a few tips to help you keep on top of your finances.

  • Make sure you know exactly what your outgoings are each month.
  • Put money aside on a regular basis for next year’s tax bill. You don’t want any nasty surprises. Also, put money aside for a ‘buffer fund’ in case you get sick or work suddenly dries up.
  • If a client’s payment terms are 60 days and yours are 30, suggest meeting half way at 45. It often works.
  • Invoice promptly when you’ve completed a job. The sooner the invoice goes out, the sooner you’ll get paid.
  • Send out a statement two weeks after your invoice has gone out. You’ll be surprised how many times you’ll get a response saying: “We didn’t receive your original invoice, can you send it again?”
  • Invoice in stages. If the project you’re about to work on looks like it will be a lengthy one (ie: two months or more), agree with your client that you will be invoicing 1/3 upfront, 1/3 half way through and 1/3 at the end. It will ease your cashflow a great deal.
  • Make sure you get to know the people in your client’s accounts department – and always be nice to them. It makes it a great deal easier when you chase them for payment.
  • If a client is late in paying you, phone them up and ask them when you can expect to be paid. Sometimes, accounts departments don’t pay unless they have been chased three times. (I used to work in an ad agency that had a policy like that.)
  • Check your bank statements regularly. The other day, I noticed that a client hadn’t paid me and I was just about to chase them when I looked up another bank account that I no longer use for business and they had paid the money into that.
  • To help reduce your tax bill, ask your accountant for a list of everything you’re entitled to claim against expenses. And then keep all your expenses receipts in a safe place – because you need to remember to claim back everything that you’re entitled to.

Are there any tips you’d like to pass on that help you keep on top of money matters?

Related post: How to recover your money when your client refuses to pay.

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