From project to project and one commission to the next, if you’re working in the creative industries you’re probably used to having a more irregular workload than most.
One week you might be completely run off your feet with work, but the next you could find yourself stuck with very little to do.
That’s something most people in the industry have just had to adapt to – and in some ways the variety of projects is what makes creative work so exciting – but the problem is it can make managing cashflow tricky.
When your cash intake varies wildly throughout the year, how can you make sure you have the money to hand when it’s time to pay your bills or invest in the business?
We’ve seen a lot of creative specialists encounter that problem, from set designers to graphic artists, and often what makes matters worse is how hard it is to keep track of your expenses across different projects.
Try as you might to collect, store and categorise all your receipts as you go, it’s not always easy to do. And when you’re up against a tight deadline, you’re probably not going to find the time to sit and analyse all of your paperwork.
The solution, we think, is actually pretty straightforward. With the right software and strategies, you can simply take the admin away, so you have more time to focus on your projects.
Make use of cloud accounting tools
Instead of having to remember to update your accounting system every so often, you can let technology do most of the work for you.
Xero, our choice of cloud accounting software, can seamlessly pull through information from your bank feed so you don’t need to think about entering the data yourself.
It also integrates with Dext (previously known as Receipt Bank), which is a useful tool for extracting and storing information from your bills, receipts or invoices.
Once you’ve got a steady stream of information coming through this setup, you should be able to build up a picture of your cashflow’s peaks and troughs over time. That might help you to spot any patterns that might not have been obvious before, and to prepare for those ups and downs.
What’s more, Xero’s reporting features mean you can create forecasts from your data, setting out what your cash position might look like months or years from now.
Again, that’s really valuable information to have to hand when you’re making business decisions, and you can tweak your forecasts to show how different scenarios might affect you in the future.
With your forecasts in mind, you might decide to put some measures in place to cover yourself during periods of low cashflow, including building a cash reserve for emergencies.
Often, the key to this is meticulous budgeting.
Tempting as it can be to spend a little more when you feel you have the breathing room, by sticking to a regular budget you can plan more effectively, and make sure you’re not caught off-guard by upcoming costs.
Other approaches could include looking for ways to reduce your costs or find extra sources of finance if you’re projecting low cashflow, or negotiating more favourable payment terms with your suppliers where possible.
Late payments are one of the main causes of cashflow problems for small businesses, but a good invoicing system can help to cut down on the time between sending your invoice and getting your payment.
To begin with, your invoices themselves should be as prompt and clear as possible. Then, once you’ve sent them, make sure you follow up politely but firmly with a series of reminders.
This is another thing software can help you with.
Xero allows you to create invoices based on customisable templates, with the option to link to your online payment system so it’s as easy as possible for your clients to send their payments through.
Chaser, another of our favourite Xero add-ons, is also great for speeding up the payment process, with automated reminders taking another task off your list.
At Evans & Partners, we help creative industry specialists to achieve both their business goals and a great work-life balance. Talk to us to find out how.