A freelance career in the creative arts
A freelance career in the creative arts

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2.3 Financial planning

Finances play a key part in your business plan. Developing short and long term financial goals and identifying tactics to achieve them, allows you to monitor progress and assess whether your overall business plan is working.

Managing and forecasting cash flow

One important aspect of financial planning is managing your cash flow, i.e. monitoring the movement of money in and out of your business. In their online guide, FreelanceUK (no date) recommend staying on top of your invoicing and ensuring that you always have a buffer in the bank to cover any quiet periods or unexpected costs.

Having at least a couple of months’ worth to cover your operating expenses will help you avoid financial strain and better manage your cash flow.

For example, if you rely on your laptop for work but your computer breaks, having enough money spare to fork out for a new one will ensure you don’t fall behind on commissions already lined up, without upsetting your cash flow.

It will also help keep everything afloat if a client misses a payment or you lose a large source of income.

(FreelanceUK, no date)

Forecasting cash flow can help you to predict cash surpluses and shortages, informing your business decisions. For many new freelancers a simple spreadsheet will suffice. Watch Video 4 about how to create a cash flow forecast.

Video 4
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