Freelancers have a plethora of options to keep track of income throughout the month, but if you took a poll of freelancers you would probably find many don’t know the state of their finances. While it is common, operating without knowledge of your financial situation is a big risk and puts you on track for a major cash crunch.
Keeping Track of Income
While you should update your books monthly at minimum, you can use one of these three simple methods to keep track of income throughout the month as a freelancer. Investing just a few minutes in a good system yields great benefits for you.
Your bookkeeping app
The first place to look to keep track of your upcoming billings is the app you use for billings. If you enter work as you complete, you’ll always have an updated running list of payments coming your way and revenue ready for your next invoice cycle.
I use the task management app Asana to keep track of my recurring and completed assignments and add articles there as soon as I send them off. Then, every week or so, I copy the completed assignments into my bookkeeping program and can see a month-to-date revenue total. I use this to gauge how hard I need to work to hit my monthly $10,000 income goal.
With this method, I always have my finger on the pulse of my business revenue and can quickly tally up my progress for a view into my earnings. This method also helps me avoid missing any bills or invoices at the end of the month. It would be a shame to do work and not get paid for it!
A spreadsheet
If you want something light and agile to keep track of income throughout the month as a freelancer, that isn’t a bad idea. I spent nearly a decade of my life working on spreadsheets as my primary job responsibility, so to say I have an appreciation for the power of spreadsheets is an understatement.
You can set up simple or complex formulas to do the math and add up income as you go. As a writer, for example, you could create a new column or tab per client and use SUMIF to automatically come up with your total income month-to-date.
If you are an Excel superstar, you may even be able to layout a tab to print in a nicely formatted invoice. Of course, that doesn’t include the easy digital payment your clients might want, but it is an option to automate a step of a manual paper or PDF invoicing process.
Pen and paper
If you really want to do it old school, you can stick with the tried and true pen and paper. Whether it is a small notebook or pad or a binder filled with your work history, you can create a system that works for you with pen and paper.
I create a paper to-do list each morning and tally my revenue there daily and weekly, but lean on the digital solution above for my ultimate destination. With a digital list, you have tons of opportunity to automate and improve your systems. With paper and pen, that may be a bit more limited.
But that doesn’t mean it isn’t a method that can work well for you. The most important criteria is picking something you will actually keep up with and a system you can follow. If that requires regular old paper, that may be ideal for your unique needs.
Rely on the numbers
Many business personalities would encourage you to follow your gut, but this entrepreneur thinks the opposite should be the case. Rely on the numbers. Follow the numbers and you can find what works well in your business and what isn’t working. Without solid books and records, you can’t make the best business decisions.
When you set up systems like this, there are no unpleasant surprises. You should always have an idea of how your business is doing at any time. If you don’t, you have some catching up to do. But lucky for you, it doesn’t have to be difficult, time-consuming or expensive. You might just need a pen and paper.
Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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