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Freelancers have a lot to think about. Where is your next client coming from? Have you got enough cash in the bank? Does an important client project need any edits? Have you chased that pesky late payment? Sometimes it seems the to-do list is never ending. And a never-ending to-do list often leads to stress.
According to the Labour Force Survey (LFS), work-related stress can mean losing 23 working days per year. Workload pressures, tight deadlines, and lack of support come in as the top causes of stress in the UK.
Regain some of those lost days by doing some small things to help reduce the clutter in your mind and ensure that you make each freelancing day count.
Cashflow management is all about ensuring that the total sum of money entering your account is more than the sum of your outgoings. Having a large income may look very appealing, but it becomes deeply unattractive when it’s all being spent and your bank balance is a big, fat zero.
Keep a steady eye on your incoming and outgoing finances. Go through your bank statements regularly and make sure you’re not spending money on unnecessary items. Are there any outgoings you can claim back as expenses? Do you really need to purchase that monthly subscription to Netflix for “research”? Are you even using those pens that looked cute on Etsy? Be ruthless and cull any flimflam that isn’t enhancing your business.
Ineffective cashflow management can lead to overdrafts, credit cards, loans and, ultimately, a lot of debt. When you’re a sole trader, your business and personal finances are one entity, meaning the burden of any debt lies firmly on your shoulders.
Invoice as soon as the job you’re working on has finished. Don’t wait until the end of the month – the only person whose paycheque you’re delaying is your own.
Hanging about for payments can mess with your cashflow and cause unwanted stress. The sooner you invoice, the sooner you’ll be paid – it’s as simple as that. If a business isn’t coughing up on time, follow up with a late payment letter and use some light peer pressure to persuade clients to pay promptly. If that doesn’t work, you can always enlist the help of a reputable debt collection service.
Knowing how much you’re worth is vital. Charge clients too little and you’ll affect your cashflow; charge too much and they’ll turn elsewhere.
Let’s say you’re a fairly modest person and the UK’s average national salary of £26,500 per annum will do you nicely. You want to work for 225 days of the year: 365 days in a year minus weekends and giving yourself 28 days holiday.
Your salary divided by your work days equals £117 per day. Broken down even further, you can calculate your ideal hourly rate. If you work for seven hours a day, your hourly rate becomes £16.71.
However, these rates don’t take into account those dreaded days when you’re between contracts / commissions – something most self-employed people will encounter – nor days you can’t work due to illness. You may, for example, want to allow for 3 days per month where you’ll be chasing new work and 8 sick days per year. This would reduce your 225 paid working days to just 181 days, increasing your minimum day rate to £146.
You may also want to take into account other financial benefits of being employed full-time, such as those generous employer pension contributions.
If you’re a more seasoned freelancer, you’ll likely be able to charge clients more or negotiate a per-project rate. But as a starting point, by using some simple maths you can figure out how to earn the average salary in the UK from your freelance income.
Your day rate is something you should revisit once a year. Has the cost of materials risen? Are others in your field charging more for projects? Don’t be afraid to be upfront with clients and explain clearly the reasons why you’ve decided to increase your day rate.
Look around you. Is your working environment a place of zen-like heaven right now?
Creating a calm and tidy office space has been known to help productivity and reduce stress. Psychologist Sherrie Bourg-Carter found that clutter can “bombard our minds with excessive stimuli causing our senses to work overtime on stimuli that aren’t necessary or important.”
De-clutter, have a clear out, spring clean. However you want to verse it, keeping a tidy workspace can help freelancers reduce stress.
Working from home is every freelancer’s dream and nightmare situation combined. You can boil the kettle as many times as you like, there isn’t anyone breathing over your shoulder, and the cat is always there for company. All valid pros. The cons? That cat may be your only company.
Working for yourself and spending a lot of time alone can make socialising seem overwhelming. Consider attending a local networking event and socialise with people on a similar trajectory to you. You might meet new friends and, more importantly, find some new clients. Plus, networking means you’ve left the house that day, which is always a bonus.
Are you a sole trader? Have you set up your own limited company? Are you contracting through an umbrella company? Each has its various pros and cons, and what’s right for you depends on your circumstances and outlook for the future. If you want some help deciding, book a free consultation with one of our experienced advisors.
Having a basic understanding of how each operates can help with your tax status and subsequent finances – meaning fewer headaches and stress for you down the line. A good accountant will be able to walk you through all the options and advise on what’s best for you.
Got any other tips to make freelancing less stressful? Let us know in the comments section below.