Even before the world was thrown into chaos by the pandemic, freelancing wasn’t the most reliable way to make a living. Even ordinarily reliable clients experience fluctuations in the work they can offer. Then when COVID-19 hit, many businesses had to tighten up their spending, leaving legions of freelancers in a precarious financial position. Thankfully, there are plenty of things you can do to protect yourself against uncertain times. We’ve listed five of the most valuable ones below:
Have financing options at the ready
Getting clients to pay on time is the holy grail quest of the freelancing universe. Since the goal is about as unattainable as the grail itself, your first line of defence should be to have an invoice finance option at the ready in case your cash flow is interrupted.
This service allows you to obtain financing against your outstanding invoices. Typical terms are far more reasonable than you might imagine. The trick is, you need to research companies and have one lined up before cash flow becomes an issue. That way, you can be certain you’ve read all the fine print and are setting yourself up with a good deal.
Streamline your invoicing process
While invoice finance is a vital first line of defence, it’s also worth taking the time to set up processes that make it as easy as possible for clients to pay you promptly. This means using an invoicing system that makes your payment terms clear and offers people convenient ways to send you funds.
It’s also important to be clear about your payment terms in your on-boarding process. You may wish to experiment with asking for half the payment up-front and the remainder on completion of each project. You may also want to try offering a discount for payments made within a certain timeframe.
Stop flying blind
If you’re the kind of person who lets the accounting software worry about the figures, you need to take a more proactive role in your cash flow. This means using the tools available to you to create cash flow statements each month that measure your earnings against your expenses, giving you an instant snapshot of your financial position. From here, you’ll also want to start making cash flow projections.
Once you’ve been creating these reports for more than a year, you’ll be able to start seeing trends you may have missed before. Instead of wondering why your work seems to come in random peaks and dry spells, you’ll start to see patterns. This will allow you to plan effectively for your leaner months.
Use quiet periods for growth
Once the quiet times aren’t taking you by surprise anymore, you can start using them to your advantage. This could come in many forms. You may wish to take a break from work to relax and refresh yourself for the busier months ahead. Alternatively, you can harness that time to pitch to new clients or take a course to add a new skill to your repertoire.
Regularly review and raise your rates
The economy is not static, and your rates shouldn’t be either. You need to account for the rising cost of living and for the added expertise you gain with each year of work in your field. If you make all the benefits of working with you clear, you’ll be able to raise your rates without scaring off quality clients.
Take action on the tips above, and you’ll be able to settle much of the uncertainty that arises from the unpredictability of the freelancing lifestyle.