Freelancers! How Are You Managing Your Finances? [for LessAccounting]
When I ended my marketing company in 2014, I didn’t know my next career step. I was open to the possibilities of working as an employee for another company, starting a new venture, working with business founders as a freelancer, or doing something completely different in the nonprofit arena. It turns out freelancing would initially choose me.
Within a month of closing down the company, I had eight projects on my plate from organizational leaders hiring me to help them solve their communication problems and grow their business. At the time, I was in survival mode doing the work that paid my bills. Eight months later, the work never stopped flowing. I chose to freelance back and set a mission to fulfill my potential on this vocational path.
During my time freelancing, I continued using a financial software that was useful for our marketing company, but it was overly complex and more expensive than what I needed as a freelancer. I also had yet to legitimize myself in this new venture by establishing a legal business entity for my work. Doing so was a meaningful gesture for me as a way to move on from my past into a new future. It was also a practical choice that would allow me to upgrade the way I was managing my finances.
Eighteen months into freelancing, there was a series of events that pushed me to finally and legally establish my new business entity and start new. Starting fresh meant an easy and clean break from the tools, systems, and companies I was associated with. By this time I was aware of and wanting to move to LessAccounting, but the various obstacles had pushed it to the bottom of my priority list. Now I could start my new company and journey with LessAccounting and my only requirement was integration with Stripe (which they have).
With a new S corporation in hand, bank accounts set up I was ready to start using LessAccounting. There are two primary reasons I signed up for LessAccounting and they are visibility of money and invoicing for tracking money owed.
For wise and precise financial management we’ll want visibility of our money. This visibility helps us see our progress, or in many cases, regress. It allows us to make decisions in our day, week and month to move towards our goals. It also provides the insight we need to ensure our funds are not accidentally or fraudulently taken. Every dollar matters.
As freelancers, getting paid is just as problematic as earning new business. Cash flow matters so I’ve found LessAccounting to be a great way for me to stay on top of accounts receivables. In Less Accounting, it shows how many invoices are late and the total amount of money owed to me.
At the beginning of every week, I’ll review the late invoices (past NET10) and follow up with these clients to identify when I can expect payment from them. The later their invoice becomes the more I increase my communication channels and frequency. With the Stripe integration, it also makes it easy for many of my clients to pay online via credit card. This convenience speeds payment along.
At the end of each week and month, I’ll reconcile my bank accounts with appropriate categories and tags for better organization. After each year, I also load up a cash flow chart view to see how steady or sporadic my year was. As a freelancer, we face the ups and downs of freelancing and what I call the ‘Roller Coaster’. My vision is to create a level of steadiness in my work and money. This cash flow view in the tool allows me to see how successful I was and think up new ideas on how to smooth out sporadic months.
While finances can feel tedious or seem boring, our financial management is critical to steady and progressive growth in our freelancing careers. Doing so allows us to master the business behind our craft and empower us to do the work we love. From our financial foundation, we’ll have confidence and assurance to work well and live with peace. If our work and income are going poorly, we can lean into the situation with eyes wide open. With LessAccounting’s great support, openness to ideas and their simple and solid toolset I’m able to easily build this foundation and move my freelancing business forward.
How about you?
How do you use LessAccounting?
Is it easy for you to see the financial numbers you care about?
Tags: My Guest Blog Posts