Content writer Grace Murphy explains how to deal with cash flow issues if you are self-employed.

Many builders, contractors and labourers work on a self-employed basis, which can be great when work is plentiful. Providing you can secure enough contracts and keep working, being self-employed shouldn’t cause you any issues.

Sadly, this isn’t always the case. In 2020 in particular, many self-employed workers have found themselves facing cash flow problems. With virtually every industry affected by Covid-19, millions of people have lost some or all of their income.

While the construction industry has certainly been affected by the coronavirus outbreak, it isn’t the only sector to face cutbacks. In fact, self-employed freelancers and subcontractors in every sector are facing the same financial challenges.

If your cash flow has been disrupted or your income has dropped, take a look at how you can resolve the issue and get your finances back on track.

1. Talk to your creditors

If you’re unable to keep up-to-date with repayments on mortgages, loans and credit cards, talk to your creditors as soon as possible. It might be tempting to avoid letters and phone calls from creditors, but this will only make the situation worse. Be honest with creditors and tell them how your finances have been affected by Covid-19 and you might be surprised at just how helpful they are.

2. Renegotiate repayments

When your cash flow or income is disrupted, it can be useful to reduce your outgoings as much as possible. One way to do this is to renegotiate your personal repayments. This might mean lowering car loan repayments or reducing the minimum monthly amount you need to pay on credit cards, for example. Do be aware, however, that this will reduce the amount you need to pay each month, but it may mean you will pay more overall. Typically, the longer you take to repay a debt, the more interest you’ll pay.

3. Get financial help

If you’re self-employed and your income has been affected by the Covid-19 outbreak, you might be entitled to financial support. The Government is giving freelancers, business owners and self-employed workers assistance in the form of grants and tax breaks, so do check what you’re eligible for. Similarly, if your income drops below a certain level, you might find that you’re entitled to monthly financial support. Many new schemes are being introduced, so be sure to check your entitlement regularly.

4. Take out a loan

If you need to access funds in a hurry, taking out a loan could be the quickest way to get the cash you need. With dedicated brokers, like, you can search for loans from a wide variety of lenders to find the best deals for you. What’s more New Horizons makes it easy for people with bad credit to get approved for personal loans. If you’ve got an unexpected bill to pay or you’re having trouble making ends meet, a short-term loan could give you the flexibility you need to get back on track.

5. Change your payment terms

Many businesses operate on a 30-day invoice period, which means that freelancers and subcontractors often wait at least a month to be paid for work they’ve completed. If this doesn’t work for you, why not modify your payment terms? When you take on new clients, you can change your payment terms so that you’re paid within seven or 14 days of the work being completed. You could even talk to existing clients to find out how they would feel about paying you more quickly. This could be an effective way to resolve your cash flow issues and will ensure that you’re not waiting for weeks for payments to come through.

6. Automate your invoices

When you’re self-employed, there are many tasks you need to complete in addition to your ‘main jobs’. You’ll need to prepare and submit invoices when jobs are complete, for example. If you’re submitting invoices late because you simply don’t have the time to get them ready, this could be affecting your cash flow.

Fortunately, there is an easy way to resolve the issue. With automated software, you can pre-prepare invoices so they’re ready to go as soon as the job is finalised. Alternatively, you could outsource your needs to a third-party company or payroll freelancer. With a little extra support, you’ll be surprised at how quickly you can improve your cash flow.

2020 has been a tough year for the majority of people. With the Covid-19 outbreak ongoing, it’s likely that your finances will continue to be affected by the pandemic for some time to come. Although this can be disheartening, there is help available. With flexibility, support and a strategic approach, you can overcome the financial challenges you’re facing, reconfigure your cash flow and even increase your income before the year ends.