Browsing Category: "Finance"
If there’s something I’ve learned about invoicing over the years, especially when working with small groups, bands or projects where jobs tend to build up over time is this - break down the invoicing.
I’ll often have mails or calls from people asking for figures “off the top of your head” or the traditional “ball park” figure. Sometimes when people see or hear those figures they become alarmed or question why the response they receive.
However, when shown a full breakdown and itemised invoice for tasks completed they soon realise what is at hand.
If you’re starting out working for yourself and getting around to issuing your first set of invoices to a client - be thorough.
Instead of charging for “web development”, can you outline what went into it and break down once off and recurring costs? Domain registration, hosting, email, phone calls, travel expenses, design, build, commercial additions?
Did you incur any additional costs along the way directly related to the project?
If anything
- It helps you understand and visualise the financial cost of the project
- It helps your client understand and appreciate the cost of the project
It also gives you a good grounding for the future when it comes to billing for different elements of a project. So if you’ve been one of those people who throw out bulk figures on a job, why not take a minute to break down the cost and reap the benefits later.
Popularity: 18% [?]
I’m still loving Freshbooks, the online accounts / invoice / time tracking solution that’s saving me a good bit of time this week when it comes to invoicing.
Having toyed around with the free version for long enough, I’ve decided that I can divert some of my monthly advertising revenues from other blogs (namely those sporting Text Link Ads) to cover the small sum of $14 per month to allow me increase my client count online.
The free version of Freshbooks limits you to three clients while the entry level solution at $14 expands that to 25 clients. As it happens the three clients I had been storing in Freshbooks for the past few months are all quite active this month along with new clients I’ve picked up of late so rather than deleting existing ones I’ve opted to upgrade to the entry level account.
Of course, there are options available for everyone whether you’ve got up to 25 clients or 5,000 and counting. For ease of invoicing, providing quotes and estimates for work and keeping track of revenue generated from freelancing during the year I’m glad I made the choice to go with Freshbooks.
If you want to try it for yourself, you can sign up here for free (free up to 3 clients).
Popularity: 23% [?]
The bank holiday weekend has come and gone and along with it comes some unexpected budgeting. Some things for this year I’ve already budgeted for - particular weekends, gigging, a holiday in October, along with all the usual things like food, petrol, rent etc.
Working for myself, I find I’m spending an increasing amount of time on the road during the week. Commercial vehicles here in Ireland are required to pass vehicle testing on an annual basis. Having passed with flying colours last year, I find I’ve failed mine this year, with flying colours. For me it means a full service, new tires, having some parts replaced, labour charges, VAT charges and more - it all adds up.
However, in working for yourself you learn to budget for the unexpected. So while I know how much money is going to be needed to cover holidays and annual living expenses, I’ve learned over the last few years that you need to keep some kind of a rainy-day account for yourself once you’ve gotten up and running.
Simple things like setting up a standing order to a savings account (I pass out €X per week that pretty much slips under my radar), opening a Credit Union savings account, or stuffing money in an envelope under bed - however you do it, it’s important to budget for the unexpected, making sure that the unexpected payments don’t have a negative impact on the costs you expect to incur on a weekly basis.
I’ve you’ve never thought of a simple savings account, maybe now is the time.
Popularity: 19% [?]
Shoestrings… bootstrapping… plenty of references and analogies through footwear when it comes to financing your business or freelance startup. Mike Smith at the Bootstrapping Blog has a nice article (spotted yesterday) on bootstrapping your freelance career.
Bootstrapping, in essence, is to start or fund your business idea without any real external assistance or financial input. You’ve got little or no funds to start your idea and you’re doing all the footwork yourself. However, there are a number of things you can do to get yourself started. While they may seem common sense to some, they could be an eye opener to others.
Click here to see Mike’s 10 steps in detail or see the list below.
- Study your market.
- Study your competition.
- Outline your plans.
- Get a website.
- Get promotional materials.
- Call call call.
- Email email email.
- Delegate (when the time is right).
- Expand (giving yourself room to breathe to watch your business flourish).
- Reward yourself.
These are a pretty much a step by step guide to getting going. Having been through the process before and currently going through the process again, you can never underestimate the early steps. Going into any type of business, particularly freelance, you should know what opportunities are out there and who your competition is. How can you approach things differently, how can you offer more value in your service (we’re talking value for money, not to be confused with lowering your prices).
The planning stage can be quite tedious but it is something you must go through and something which can save you an awful lot of time in the long run especially when it comes to dealing with finances, advertising, future expansion - have a plan for everything.
If you’re stuck for free advertising ideas, why not read my post from earlier this week on How Do You Advertise Yourself Online?
I’ll be looking at some of these aspects in my blogging for beginners talk next week, especially when it comes to getting a website (a blog can be the perfect, and free, solution) and promotional materials.
While the 10 steps can’t guarantee success, they can certainly put you on the right track and save you a few pennies along the way.
Popularity: 14% [?]
Yesterday I made a point about having to reference everything when it comes to online banking. Today, I’m once again both mindful and thankful of that point.
After 3 consecutive days totalling roughly 27 hours, I’ve come through the other side of the accounts and I’ll be making and collecting payments due from/to me tomorrow morning.
The downside is that I lost 27 out of 40 hours (I usually put in 40 hours at a minimum in the office) available to me this week, leaving just 13 for client work, the bulk of which will be a full day behind my regular desk tomorrow. This is valuable time lost on jobs that will have to be made up over the next week or so (and will be made up, I assure you of that).
However, I’m looking at it this way.
Say I pay myself an hourly rate of €15. My take-home wage on a weekly basis would be €600. If I’ve spent 27 hours doing accounts, chasing bills, invoices and documenting everything along the way, those 27 hours have cost me a total of €405, leaving me an effective take-home page of €195.
Last year my accountants fees were in four figure territory, not three, largely due to the fact that this kind of work wasn’t done. So if I’ve dropped €405 because I took three days out to review finances, I’ve likely saved in excess of €1,000 for making the effort.
I’m not an accountant by any stretch of the imagination but if you were to sit me down in the morning I can show you where everything came and went - purchases, sales, cash, wages, loans, taxes and more.
If you’re working for yourself I feel it is vital you both know and understand that kind of information - especially when it comes to filing your taxes at year end. I also saved money on using accounting software too - I started a series of spreadsheets in OpenOffice, made out all my formulas and references and got stuck in.
That said, I’ll still use an accountant at the end of the year to make sure everything is in order from a legal perspective, but I’ll have saved a lot of time, hassle and money in the process.
I can promise you, after these three days I will thoroughly enjoy the weekend.
Popularity: 15% [?]
As I mentioned yesterday, I had informed a number of clients I would be unavailable Tuesday and Wednesday as I was making time for my accounts (for the business).
After two days of pouring over invoices, receipts, bank statements and preparing a number of payments to go out this week, I offer up this tip if you are using online banking…
It will save so much time in the long run. In my case, I deal with two bank accounts, one as a current account and one strictly for tax purposes - any taxes or VAT owed wind up in here so I can keep track of everything during the year. Given that situation, I transfer funds online between both accounts on a regular basis but it sure helps to use the ‘REFERENCE’ tag if you’re online banking platform allows it.
This comes in the form of a ‘reference’ box, notes, additional info on a payment - make sure you’re referencing and detailing everything. Unless you’re documenting every payment you could be facing a battle when, like me, you choose to go back through months and months of accounts.
Luckily, I referenced *most* payments. The rest seem to be falling into place!
Popularity: 15% [?]
Here’s a list of ten financial tips that can apply to you as a freelancer, if you’re working for yourself or you’re considering going freelance. This are simple, but effective, tips when it comes to dealing with money and personal finance.
See the link at the end of the post for a sample cash-flow analysis spreadsheet you can use to predict your cash for for any given 12 month period.
- Be realistic when you’re drawing up a budget. Try the spreadsheet I’ve included at the end of the post. If you’re realistic with your budget you’re more likely to stick to it.
- Keep track of all your spending, even the smallest of purchases (lunch out with friends or a client), it’s important to be able to budget for the small in things in life as well as the big ones.
- Try to keep your personal and business expenses separate. Know where the divide lies between personal phone calls and business ones, fuel expenses etc. You may be entitled to tax relief on these items.
- If you have any high interest loans, it is recommended to clear these first. This includes high interest credit cards, particularly if you’re using credit cards to cover client expenses (travel, web hosting etc.) while waiting for an invoice to come in.
- Save, save, save. Even if it is the smallest of savings, having a small nest of cash can help avoid debt problems.
- Once you’ve decided it, stick to your budget. I look at budgeting the same way as I look at losing weight (which I’m doing, and sticking at my healthier lifestyle) - it isn’t something you can do for a week or two, feel good about yourself and then give it up. You have to see it through!
- Review your budget. This is an important one. Plan your starting budget, get into it for three months, then review. Continue for three months, then review. You see the pattern. Thinks like mortgage repayments, insurance repayments and interest rates all fluctuate month-to-month, how does it impact your budget?
- If you find yourself struggling with loan repayments then talk to your financial institute or manager. Don’t go loading payments onto credit cards and certainly don’t go hunting down loan sharks! You may be able to agree a re-structured deal for your repayments, allowing you to pay back a lower return on a monthly basis.
- Allow some flexibility. The same thought here is born out of following a weight loss plan. You can’t cut EVERYTHING out, allow yourself some flexibility in the budget. Don’t say you’ll ONLY spend $50 a week on food when you know you’re going out for a meal at the weekend that will cost you an extra $30. Where is that extra $30 coming from? If it isn’t used, then it’s spare cash floating around the budget - sometimes a little breathing room helps.
- Take Your Time. Not to keep comparing budgeting to weight loss but this point is true again - take your time. You’re going to find it tough going for the first while, getting to grips with living and working within a budget but once you find yourself in the swing of things you’ll be grand. So long as you’re patient and take your time!
Cash Flow Analysis
In any business, however big or small, it is vital to know where to money is coming from and where exactly it is going out to. A 12 Month Cash Flow Statement is available for download here (suitable for Microsoft Office Excel or Open Office). Fill in your financial incomings and outgoings and you’ll soon build an idea of what it takes to survive, break even, or make a profit for yourself.
Tip: Duplicate the spreadsheet within the same book and plan for year 2 and 3. If you’re developing a rising trend in your sales, it is certainly interesting to watch the impact of the trend when you pass the 12 month mark.
Cash flow analysis chart comes via Score.org, the Counselors To America’s Small Business
Popularity: 10% [?]
The Toronto-based team behind FreshBooks (online invoicing tool useful for freelancers) have today released their version 4.4 upgrade.
I’ve been a FreshBooks user for a few months now, keeping the number of clients on the service (you’re allowed a few clients on their free service) low before deciding to move over to their service for full-time billing and invoicing. The thing is, I’ve decided I’ll be making the move but the procrastinator in me is holding out to finish off invoicing matters with existing clients.
However, new clients as they arrive are being moved onto FreshBooks.
If you’re on the lookout for an easy-to-use online invoicing and time management tool, you have my recommendation. Invoices you create and email out to clients generate online access accounts for your clients to allow them log in, view outstanding payments or make payments online (credit card, PayPal etc.).
They’ve also gone and released (with version 4.4) a handy time tracker widget for the OSX Dashboard.
While the free account limits you to using just three clients, you can upgrade to 25 clients from just $14 p/m, great value if you’re living and working within the European market. There’s also plenty to choose from in customising your own console, branding your own electronic invoices (or snail mail options if you choose to go postal), issuing recurring invoices, tracking billed and unbilled hours and lots more besides.
If you haven’t yet tried FreshBooks and you’re looking for an invoicing tool to help keep track of your freelance work then go no further.
Popularity: 17% [?]
