Let’s face it, Canadians are changing the name of the work game, ditching the regular nine-to-five day job, in pursuit of owning their own businesses.
The flexibility to design your own workday, take on projects that you love, and the ability to work remotely, are a few of the many reasons why people are making the switch.
But it’s not all fun and games when running your own business. Interac Corp. recently conducted a survey with Canadian entrepreneurs (side hustlers and micro-business owners), looking at late payments and the implications it can have on a business.
The survey revealed that 71% of entrepreneurs are busy chasing payments because they’re not being paid on time. This means that they’re spending more time following up on late payments and less time growing their businesses.
Lauren McPhillips, founder of This Renegade Love and The Renegade Session (a series of workshops designed to support female entrepreneurs), has firsthand experienced the frustrations of receiving late payments. McPhillips shared four money management tips with us to help keep the business side of your side hustle or small business on track.
Put money aside for a rainy day
As an entrepreneur, you may no longer have a steady cash flow, and some months can be better than others. To protect yourself, McPhillips recommends putting money aside for a rainy day. Create a slush account that you can contribute to regularly and save three months worth of operational costs. This simple step can help you ensure that your business can stay afloat if a client fails to pay an invoice on time.
Streamline your payment processes
Nobody starts a business expecting to spend a huge chunk of the day following up on invoices. To avoid this, McPhillips suggests using Interac e-Transfer Request Money to ensure you can get paid quickly and on time. When you send a Request Money via Interac e-Transfer, your client can immediately fulfill the request and transfer the money directly to your bank account. This means the funds are immediately available for you to use — no more waiting for a cheque to be mailed or cleared by your financial institution (hallelujah).
When it comes to her bookkeeping, McPhillips says Request Money is a helpful tool. You can add an invoice number with participating financial institutions when you send the request, making it easy to reconcile invoices. Plus, using Interac e-Transfer is a less expensive and more secure form of payment as there is no sharing of your banking information. Instead of sharing your banking information with anyone, all you need is an email address. It saves you the frustration and awkwardness of following up with clients for overdue payments.
Get tax season-ready
Let’s face it, tax season is nobody’s favourite time of year. But you don’t want to be faced with a scramble and a huge tax bill you haven’t prepared for at the end of the financial year. There’s no time like the present to prepare for next year and save yourself any unnecessary stress. Make sure to set aside a portion of the revenue of each client invoice for any taxes or HST owed. Remember — don’t touch the money you set aside for taxes because it will benefit you in the long run for the next tax season.
Keep the payments coming in
You can’t always predict how things will be when you’re self-employed, but it’s important to regulate your income stream where possible. McPhillips explains that having a few clients on a retainer will give you a better idea of the minimum amount coming in each month and allow you to create a bit of a structure to cover your overhead.
Interac e-Transfer Request Money is available with many financial institutions in Canada. You can access the feature through online or with mobile banking under “Interac e-Transfer.” If you have any questions about Interac e-Transfer Request Money, simply contact your financial institution.