With freedom of work schedule, being self employed poses several challenges. Be it a delayed payment cheque from a client, shortage of cash or dry spell of new orders or rejected loan application by your bank, you are required to keep tab on all.
Many self employed entrepreneurs burn themselves day in and day out to manage positive cash flow. For freelancers and self employed individuals what is in hand is better than what they could owe. To borrow from a regulated lender, you need a proof of constant monthly income. Most people working on contract fail to establish their worth to the lenders despite having enough history of income in the past.
The precise reason is uneven income flow. On some days you bag overwhelming customer response while on other occasions it is just enough to meet your everyday expenses. When your income is uncertain it is important to budget your expenditure and have a robust fund for emergency. Let’s more such tips below:
Have an emergency fund for at least six months
As a part time contractor or self employed individual, it is important to have an emergency fund for at least six months. The target may appear too much in the beginning and you might not be able to reach it immediately but constant saving in the direction could help you have a robust reserve in a short span.
Having a reserve fund helps you stay ready to meet emergencies all the time. Whether you need money for short term cash lapses or for business expansion, you get required work flexibly.
Having a clearly defined budget helps you ensure fixed saving every month. The availability of emergency funds also limits the need for unplanned high cost borrowing.
Be organised and keep records
Keeping a check of your financial records goes a long way in helping you build credit. When you fill regular tax returns, you basically build a strong income proof in your favour. Most lenders would accept income tax return as a proof of income for accepting your loans for self employed application.
A quick check list of records would include: revenue statement, expense report, profit and loss statement, balance sheet and ITR. These documents are enough to provide a detailed outline of your income and expenses.
Always pay debts on time
Your past credit records play an important role in making you eligible for loans today. Even when you are regular in repaying your credit card bills, you build good credit history. Always ensure that you do not delay the payments and build a good repayment character on your credit report.
Seek professional Help
Despite being financially prudent, you might find it difficult to locate urgent funds in the UK. Herein you can consider using a professional’s help and apply online for personal loans for self employed. You contact a loan broker and seek free help in the direction. Brokers work on commission which they generally charge from lenders. They extend free advice to borrowers.