Freelancing is not for the faint-hearted. Sure, you don’t have to wear a tie or deal with traffic, and there’s no pressure to look busy all the time, but you do face a unique set of challenges. You worry about clients not paying on time, inconsistent work, the pay is often low, and there’s room for exploitation because the whole thing isn’t regulated.
If your finances aren’t as healthy as you’d like them to be, and you want more control over your career, here are some tips on how to solve the biggest obstacles standing in your way.
- Dealing with payment delays
Record every penny you’re expecting along with the date you expect to receive it by. That way, clients don’t get away with hoping you forgot about your money. If you have an established relationship with your client, don’t hesitate to ask for your money on the spot – you have every right to do so.
Another great option to consider is invoice discounting. This allows you to borrow against your customer’s invoices without them even knowing, making it easier to manage your customer accounts. Since this is short-term borrowing, you can get a quick boost of working capital and keep your cash flow in a healthy state, all without having to hassle clients for payments.
- Irregular Workflow
Going through periods of reduced work is part and parcel of the freelancing life. Instead of waiting for the next assignment, be proactive and hunt down the kind of work you love doing.
Open yourself up to more opportunities. Hunt for more clients, seek more platforms, and make use of both online and offline booking methods. Put yourself out there, market your services in any way you can, and use different media to reach out to potential clients.
It’s also worth maintaining a line of communication with your existing clients because the more you engage with each other, the better your working relationship will be. With good client relationships comes a greater chance of being the first person they think about when they (or a colleague or friend) need more work done.
Lastly, don’t take the power of social media for granted. Not only can you reach your clients easily, but you can also find freelancer communities where you can get some serious networking done.
- Inconsistent Cash Flow
Proper budgeting is important. Note down all of your necessities and outline your savings plan. Know how much you spend every month and determine the cost of your indulgences. If you don’t already have one going, it’s time to start a ‘rainy day fund’ so you’re covered in case of an emergency. Resist the temptation to spend money unnecessarily and prioritize putting funds aside for those long-term objectives.
- Tax Attacks
You’ll have to deal with self-employment tax, which means keeping track of your finances and knowing your income and your expenditure. Put some cash away from each payment you receive to cover your taxes. Don’t wait for the end of the year when you have a sizable tax bill to deal with. Just pay every four months and avoid any penalties.
- Time Management
How you manage your time will determine how much you make. The more productivity you can squeeze out of your day, the easier it is to find more opportunities, and the better your work is likely to be.
Clients love motivated freelancers, and the way in which you manage your time and control your cash flow will influence your relationship with them. Dial in all the elements mentioned above, and you’ll be putting the “free” in freelancer before long.