How UAE Freelancers Cope with Unstable Finances

Working in countries with high costs of living such as the UAE, unpredictability of income can be a problem a lot of UAE freelancers face.

Some causes of this income unpredictability could be due to clients not making payment in time or defaulting on a payment. Other reasons are if the freelancer is not paid the right amount for the project, inflation and dry seasons.  A small client base can also lead to an unstable income over time. While freelancers spend time managing the existing clients. They often find it hard to allocate sufficient time to business development. Getting new clients is just as important as maintaining the current ones to ensure a steady flow of income.

How can one then cope with such issues?

1. Budget and manage your cash flows

Since the income is unstable for freelancers, don’t overspend when the pay is high.  Stick to the budget and manage your business within the available resources. According to experts, 8000 AED is enough to cater to healthy family life while for Bachelors the figure is about 2500 AED. Therefore,  Concentrate on huge expenditures such as rent and cut unnecessary luxuries. Use advanced bookkeeping skills and techniques such as knowledge of excel, quickbooks, and accounting to keep spreadsheets of income, expenses, indicators of projected future cash flows and track outstanding and prepaid liabilities and assets. If you are not familiar with the accounting standards, then there is no harm in getting help from a freelance accountant in the UAE to help you with bookkeeping. Also, if you have a basic idea of maintaining your accounting, Waves accounting is good accounting software for freelancers. It helps you maintain your personal and business both in one, also you can generate invoices and reports all in one.

Plan and forecast to get a framework that facilitates the most economical, effective and efficient use of available cash. Payment defaults is a risk you will face along the way. Create a provision for irrecoverable receivables. As irrecoverable receivables are recorded as expenses and lower down your net profit margin. You can prepare for the unforeseen losses, for example, by

• Using the extra income to buffer future expenses.
• Avoiding unnecessary treats and luxuries.
• Having a home office.
• Buy second-hand furniture and refurbished equipment from a reliable vendor.

Do not forget to invest extra cash once all expenses have been sorted out. Investing in options, shares, and projects that have the potential to grow will plant the seed for future projects. Make your money work for you. That is what the richest man of Babylon had to say, no matter how small your savings are. The main objective of that fund should be to make you more funds. Invest in safe options and with a long-term perspective.

2. Cushion with side hustles.

Mix both large and small projects -especially those that bring in regular income to mitigate the adverse effects such as payment delays.  Offer consultancy services for small and easy gains, For content writers in the UAE, creating content marketing mix and strategy can be offered in between big projects to earn some extra cash. Payments from small gigs can help cover up daily household expenses such as grocery and rent.

3. Be flexible

Don’t let too much me-time hold you back from genuine opportunities to make extra cash. If you have a chance to make money but need to go out on vacation or an evening treat, you can make the sacrifice and take the gig especially if your balance sheet is not looking so good. Be flexible enough to reassess your priorities when opportunities show up. Don’t be afraid of stress; use it to stay focused on your ambitions.

Figure out when to outsource for services such as house and laundry cleaning, food delivery and more to make the right trade-offs between time and money.

4. Upgrade smartly

Get better equipment and technology that enables you to handle tasks well and deliver projects. You can find affordable high tech gadgets at affordable prices at computer plaza, near Fahidi Metro Station in Dubai, check them out and compare the deals on the table before making purchases. Otherwise, you can always order from souq.com. Awok often runs AED 1 offers on computer accessories. The quality of such items is not great. However, if you are on a budget at the beginning of your freelancing career, then you can explore various deals online. As you get a few clients, go for high-quality gadgets to deliver the best quality work to your clients.

5. Save when you can!

If you are living in Dubai, you need to have enough bank balance to help you sustain at least for a year without any job. This will give you enough time to get new clients when you lose the old ones. As accommodation and education are very expensive, it is impossible to stay in the country without a job.

6. Maintain your existing clientele

Freelancers often find themselves stuck with a handful of clients. This can make it hard for the freelancer to provide services to all the clients at once.  The best way to tackle this issue is to offer high-level customer service and support. Schedule your time and make sure all clients have been attended to. You should focus on maintaining a good relationship with your clients. If you are in the same city with your clients, you can organize a physical meeting once a while. If in-person meetings are not possible, you can have an online conference.

It is also good to have future project opportunities up in the pipeline secured in advance. Keep a portfolio of previous workpieces you have done and use this to bid for work. Let your experience speak for you. Let the clients know that you can deliver on your promises. Experts say that offering to do some projects for free or at a discount can also help land clients. Bear in mind the consequences of offering a service for free. You can attract the wrong type of clients when you offer free services, such clients are more likely to default on payments. It is a long-term play that helps establish rapport. For example, if you are a web designer come up with web design then offer it to a new client as a trial for a limited period of time. This will help to bait them in.

Another point is to stay visible.  Use social media, networking, referrals, Google Ads and other SEO techniques to allow people to know you exist. This will help you find new clients who will send you projects to fill up your calendar.

Scheduling work in advance is not the only way to stay ahead during drought. Increasing the rate you charge per project is also a good alternative. Although, do not over- sell your services as it might scare away new clients.

Understand the rules of freelancing in the UAE

Remember that VAT has been introduced recently and it includes not only food items also services such as consultation and maintenance. Additionally, some emirates charge Corporate Income Taxes, therefore, try to stay on the right side of things legally. The key points are:

• Don’t rush to register your business for the 5% VAT. The voluntary limit is Dh 187,500 while Dh 375,000 is mandatory. If you register before the necessary level, you cannot claim the expenses back.

Trade license can be obtained from the Dubai Department of Economic Development or the Free-Zone Business Setup. Research has shown that businesses set up through the free-zone are designated as foreign-owned and do not pay any taxes for 50 years.

• Visa is required for non-residents. But if you have a husband there, you can use a No-Objection certificate to apply for the license with his visa.
• A No-Objection Certificate is to be submitted acknowledging the change from a residence to a freelance visa
• Office space is a requirement when obtaining a license, but it doesn’t have to be big -just a room with a desk is enough
  

To sum it, freelancing has got its ups and downs. There are many appeals in working freelance since one is not bogged down working for one particular employer. There’s the independence of selecting workpieces – picking up projects that can be delivered, choosing to work with specific employers among others. But on the other hand, it’s rocked with financial instability and requires one to be business savvy and flexible at least in the beginning you will feel the tides are rough.

The post How UAE Freelancers Cope with Unstable Finances appeared first on Bawabba Blog.

from Bawabba Blog http://blog.bawabba.com/freelancing/how-uae-freelancers-cope-with-unstable-finances/