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Managing finances for freelancers and small businesses

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  • Managing finances for freelancers and small businesses.
Managing finances can be a major headache for freelancers and small businesses.
If you’re a freelancer or a small business owner, then you’ll know that managing finances can be a time consuming and complicated process. Preparing invoices, chasing payments and keeping track of cash flows can end up feeling like a full-time job
Q: I’m new to running a business. Where do I start?
The UK Government’s Business Support Helpline and website has lots of free advice for setting up a new business, writing a business plan and keeping your company going.
You should also get some advice from an independent consultant, advisor or a mentor that specialises in the creative sector. Websites like - The Business Side provide really great practical legal, financial advice, templates and coaching and there’s Upstarter, which runs programmes like ‘Six Weeks to Pop-Up’ and offers loads of support for creative micro businesses
Q: Do you have any advice on keeping track of expenses?
Make sure you’re up to speed on what HMRC considers allowable business expenses and what you can legitimately claim. And keep your receipts. Some accountants supply a simple spreadsheet into which you can input your expenses and keep track. You’ll need this information for when you or your accountant submit your annual tax return.
Q: I’m spending too much time preparing invoices. What can I do?
Get digital! There are lots of templates available online that you can download and customise as well as some great time-saving apps and software. Some people prefer to just set reminders in the standard calendar and reminder apps that come with your phone. Others find that those built into finance and banking apps make more sense, so all business admin stays neatly in one place.
Q: How long should I wait before chasing up an invoice? And what’s the best way to do this?
From the outset, when negotiating a contract or starting a new relationship with a client, make sure you include details of your payment terms and any late payment fees in your main contract terms, so that clients know what your expectations are from the start and also that they will face a penalty if they don’t meet these.
In terms of chasing up payment, this is very much a case-by-case basis, but once the payment due date has passed and you’ve delivered the work, you can start to send gentle reminders. It’s best to send reminder emails rather than leaving voicemails, as that way you can keep track of when and how often you’ve had to chase should the situation become really problematic.
Q: How do I work out how much I should be charging for jobs?
You can get a sense of the typical day rate or project rate for your specialist area by talking to your peers and checking guidelines issued by industry trade bodies. You work out the amount to charge based on that, and of course, how many days or weeks you think it will take to complete the work.
Q: I feel like I’m spending too much time on finances, and not enough on being creative. What can I do?
Everyone who works for themselves or runs a small business knows that admin can be very time consuming. At best it’s a bit tedious, at worst it’s quite overwhelming. Try and compartmentalise your week so that you slot in admin tasks at a particular time. Pick a day or time when you’re usually feeling least creatively inspired anyway and use that for sorting out your finances instead.
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