When you’re in charge of running your own business, it doesn’t matter how big or small you consider the business to be, you and you solely will be responsible for every single aspect of running the business in question.
This ranges from everything from making sure you have enough paper in the office, to balancing your books and submitting your tax return each financial year. When it comes to running a business, more commonly than not, the thing that most freelancers and business owners seem to struggle with the most, is the accounting and the financial side of things, and you can see why.
You are a business owner, and you specialize in whatever it is that your business model is based around. You are not, however, an accountant or professional bookkeeper, yet in the eyes of the taxman, that is irrelevant.
Failing to have your business finances in order can make life much harder than it needs to be, plus it could cost you and your business money in the process. To help you get a handle on things, here’s a look at a few simple and effective ways of improving your business finances.
Draw up a budget – When it comes to managing the finances of your business, one of the most important things you need to know, is exactly how much you have going out each month, and what you have coming in.
Now, for freelancers, this can be tricky because like all self-employed entrepreneurs, no two financial months will be exactly the same. Some months you will make a lot, and some will be slightly quieter than others. It’s the nature of the beast, unfortunately, so obviously you won’t know exactly how much you have coming in.
When you obtain regular clients, however, and when you’ve been trading for a long time, you will, of course, get a pretty accurate idea of how much you have coming in each month. This is where it pays to draw up a budget because you can then plan accordingly for incomings and outgoings.
Every single incoming and outgoing should be accounted for, no matter how insignificant you may think it to be. This is important because seeing exactly where your money is going will give you a clearer idea of what you could potentially do to cut back on your expenses.
Fast-track the invoicing process – For businesses of any size, it’s important that you have a handle on your invoicing process because it is this process which basically ensures you get paid by your clients.
If you’re constantly having to create custom invoices, and make changes and alterations here, there, and everywhere, obviously this will slow down the invoicing process and make it tougher for you to get paid. For this reason, accounting software could prove very useful.
These forms of software are designed to help improve all aspects of your business accounts, including the invoicing process. For example, if you have regular clients whom you have to invoice at a certain date each month, the accounting software in question can be programmed to automatically send out invoices to the clients in question, whenever you like.
Basically, you program it in advance to invoice for you, so you don’t need to worry when the time does come to invoice, as it will already have been sent out for you.
Ensure clients pay on time – As a freelancer/business owner, it is down to you to chase up payment. Some clients out there will be sporadic with payment and may simply pay as and when they decide to check their emails and notice that they’ve received an invoice from you.
This, however, is far from ideal for you because not knowing when you are going to get paid will make it much harder to budget and plan your incomings and outgoings. So then, it is down to you to set your terms and ensure clients pay you on time.
Before agreeing to take on any work for the client in question, make sure they are serious about paying you on time at a predetermined date, providing you have completed the work of course. You could impose penalty charges for late payments, which obviously will be an incentive for the client to pay on time.
If they don’t, your job is to chase up the payment and find out what is happening. Now, you needn’t send the boys around with baseball bats, nor should you lose your temper or get confrontational, but as it is your money you are owed, it is down to you to ensure clients pay in full, on time.
If you do a good job and show that you are willing to accommodate them wherever possible, they will be more than happy to pay you on time anyways, because it will be in their interests to keep you happy, as they will be impressed with the work/products you have provided.
Speak to an expert – If numbers are not your strong point, don’t try cutting corners in order to save yourself the odd bit of loose change here and there. Instead, speak to a professional accountant/bookkeeper and consider hiring them to keep your finances in order instead.
These experts work will make use of the latest accounting software, they will have years of experience, and they will be highly skilled with what they do. Obviously you have to pay them in exchange for their services, and their knowledge and advice, but in the long run, doing so will save you a great deal of time, effort, and money, plus it will provide a great deal of peace of mind as you won’t need to worry about getting your taxes in on time, or submitting the wrong ones.
Only borrow what you need – Finally, the last thing you need to remember is to only borrow what you need. A lot of freelancers and small businesses will be tempted to borrow more money than what they need, though, in reality, this is not beneficial in the slightest. All money you borrow will have to be paid back eventually, and the more you borrow, the longer it will take to pay off your debts, plus the more interest you will pay.