Being a freelancer is equal to a busy person. And the worst part of being one is managing all of your finances. However, it is still important to keep track all of it even though this means completing various loads of task every day. With that said, listed below are a few tips to help you manage your finances as a busy freelancer.
- Keeping Track of Your Invoice and Expenses
- To track cash as a freelancer, you need to monitor the money you’re spending and the money to receive. This will help you keep track of everything without worrying what happened to your cash.
- To track the money you spent, keeping a full complete record of all your freelance work expenses is a must. This means filing purchase invoices or sales contracts. But better yet, just record all the receipts you have when you purchased something.
- On the other hand, keep track of the money you receive by recording every sales invoice you have issued to your clients. Not to mention, additional pay they have offered to you.
- Make it a habit to record your
invoices and expenses. Doing so will save you much time for other freelance
work for later. Better yet, you can use invoice tracking apps that are
available for your smartphones to help you manage it easily with less hassle.
- Keeping Track of Your Monthly Finances
- To keep track of your monthly finances, you need to do bank reconciliation. If you don’t know what it is, bank reconciliation is the process of matching your bank transactions with your income and expenses. It’s a pretty daunting task to do, but it’ll help you manage your cash easier especially during busy moments. Bank reconciliation can be done manually, and there is a pretty good reason why you should do it at the end of the month.
- First reason, doing it regularly involves lots of unnecessary work. But if you do it at the end of the month, it’ll be easier to see which invoice is completed and which one needs to be managed.
- Second reason, bank
reconciliation is a time-consuming and boredom-inducing task. However, there
are several invoicing software available on the web that has a built-in bank
reconciliation feature. What you will do is just upload the bank statement and
let the software do its magic for you. Now that’s more like it!
- Keeping Track of Your Yearly & Quarterly Finances
- One of freelancer’s worst enemy is probably doing financial reports. This is a very daunting task to do especially if you have little to no background about accounting at all. However, if you’ve mastered the art of bookkeeping, then creating financial reports is a walk in the park.
- Two key financial reports should be kept in mind when doing one: Profit and loss statement and the Balance sheet. And doing these reports at the end of each financial quarter and the end of the year is crucial.
- The good thing about quarterly reports is it’ll let you see your performance from the past months which enables you to track if you have met your financial expectations. Every business is affected by seasonality, and there’s nothing wrong with a fluctuating financial data because it is part of the business itself. But by creating an annual report, it will give you a better overview to see if your freelancing work is actually profitable or better be left off down the drain.
- And lastly, if you already know how to keep track invoices or do bank reconciliation as mentioned in the first two tips, then creating financial reports is now a whole lot easier. You just need to fill in the gaps and voila! You’re done.
- Keeping track of your financial matters as a freelance writer is not everyone’s cup of tea. But there’s nothing wrong on spending a few minutes on doing one. It will save you time, hassle, and will help you understand the future of your freelancing career in the long run.