Why financial admin should be top of the freelance to-do list

Business news and opinion

24 February 2016

Freelancing offers the flexibility to organise your own working routine, potentially making work more efficient and fulfilling. However, with great flexibility comes great temptation to engage in what the British Psychological Association calls 'grazing' behaviour: refreshing emails and taking calls outside of your designated 'office' hours.

With small business professionals under pressure to serve multiple clients, stay on top of projects, be constantly available, chase new business and meet tough deadlines – all while trying to maintain some work-life balance – it's no surprise that things like financial admin can fall off the list.

However, there are a few big reasons why staying on top of these tasks can help to relieve stress and protect your livelihood.

Making money

One of the biggest pressures on freelance or contract workers is making sure you can pay the bills. Despite this, a YouGov survey found that just 26% of small business owners claim back all of their expenses. In fact, they found 21% reclaim only half, or less, of what they spend.

The reasons for this were varied:

  • 35% blamed lost or forgotten receipts – suggesting that scanning or logging receipts electronically is admin worth doing.
  • 41% said the sum wasn’t worth claiming – indicating that totting up expenses on a weekly or monthly basis is more important than many realise, as even small sums can quickly add up. Online or app-based expenses tools like Track Every Coin, Webexpenses or The Money Advice Service budget planner can help.
  • 41% said they were worried about claiming the wrong amount, or being challenged by HMRC. Tracking expenses makes a big difference here too, but reading through Gov.uk's quick guide to expense claims is also helpful.
  • 13% were avoiding admin, and 3% were embarrassed at how long they’d left it to claim: a clear reminder of how important it is to tackle admin on a weekly, if not daily, basis.

Improving your lifestyle

The same YouGov survey found that 46% of respondents felt anxious about the tax system. Developing good working habits (including keeping on top of admin before it becomes a source of stress) can also help to combat day-to-day anxiety.

Scientific studies show that taking regular breaks throughout the day improves self-control, decision-making, focus and energy levels. While complete detachment through exercise, meditation and the like are often cited as optimal breaks, the University of Illinois found that simply switching tasks improves your focus in the long term.

This opens the window to what some call ‘positive procrastination’ or ‘structured procrastination’. In other words, using natural breaks in your attention span to insert useful and satisfying daily tasks. Some might do household chores, others may run errands – but if you can slot financial admin into this space, you could find your stress levels reduced (and your bank balance looking healthier).

Securing your business

Financial admin isn’t just about managing money, however – it’s also about managing risk. In a 2014 survey, we found that 52% of businesses who provide professional advice to clients fail to buy professional indemnity cover, leaving them open to costly legal action in the event of a mistake.

Depending on your business, you may also be legally required to hold certain types of insurance cover. For example, you may need employers’ liability insurance if you bring in employees (even on a project-by-project basis) and your car or home insurance may not cover you if you use them for work. Putting insurance on the admin back-burner, then, can pose a real risk to your business – leaving you exposed to legal action or compensation claims.

So, whether you want to improve productivity, profit, wellbeing or the long-term prospects of your business, it pays to stay on top of financial admin.