I’ve now been freelancing as a PHP developer and system administrator for eighteen months, the same amount of time I spent working at my previous employer. Whilst there have been a few frustrations, by and large it has gone well and everyone I’ve worked for has paid in full and on time.
I took the decision early on to focus on clients who wanted someone who they could rely on to work with them on a regular basis, but not necessarily full time. A lot of contractors do three months full time at one place and then move on to another client, but I didn’t want to follow that route as I like to work for a variety of clients at the same time. This seems to have been a good call, and has resulted in the majority of my income being regular work or repeat business.
If you’re thinking of going down the freelance route in 2017, here are a few tips I’ve picked up along the way:
- Set up a separate bank account for all your business work, even if you are a sole trader. This helps keep a line between business and personal spending, and will make your end of year tax return much easier.
- Every time an invoice is paid, transfer 30% of the amount (after any direct costs, e.g. if you’ve recharged travel expenses) to another bank account and leave it there. When your tax is due, the amount in this account should be sufficient to cover the bill. Do the same with any VAT if you’re registered. If you have a mortgage you may even be able to use this money to offset your loan and reduce the interest paid.
- Keep your credit terms tight. I generally allow 14 days for corporate entities and ‘on receipt of invoice’ for individuals, which I think is reasonable in an age of electronic invoicing and payments. Even large clients will sometimes agree to short credit terms if they need your expertise.
- Stick to your rates and terms. By all means consider offering a discount for regular work or large projects, but be wary of people trying to squeeze you. If someone asks for a 50% discount on your day rate and wants twice as long to pay, ask yourself why.
- Have a clause in your terms of business that states you own the intellectual property in any work until your invoices have been settled in full. This prevents clients from going bust without paying and then the administrators selling your work to someone else who won’t pay your invoice.
- Check out all prospective clients before providing a quote. I’ve had several people ask me to work with them, only to find from a quick search at Companies House that all their previous businesses have gone into administration, often leaving creditors thousands of pounds out of pocket. Whilst a single failed business isn’t a reason to automatically reject a client, multiple failures means you need to ask further questions.
If you’re looking for a professional who will support you and your business on an ongoing basis, I have some availability from January 2017, so please get in touch for an initial discussion.