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The recent budget announcement was highly anticipated by millions up and down the country, including self-employed workers who found out that the Self-employed Income Support Scheme (SEISS) would remain in place and provide two further grants to help cover average trading profits.
If you’re a self-employed worker who is struggling to cope with the financial damage caused by coronavirus, we’ve put together some practical financial tips to help you out.
If your business is struggling, it’s important to keep a level head and plan how you’re going to fix the problem. There is help available, so be sure to claim all SEISS grants your business is eligible for and seek free debt advice if your cashflow is looking uncertain.
Take action as soon as possible
If you act as soon as you’re aware of a cashflow problem, you’ll have more options open to you. If you are in debt, you may be racking up interest and charges from creditors so it’s best to address any loss in income and prevent overspending as soon as possible.
By acting early and seeking advice or entering into a debt plan, you may be able to avoid being forced into bankruptcy. Alternatively, you may be able to get some advice on how to cut back on spending to help balance the books.
Work out your income and expenditure
It can be difficult figuring out what you can afford to pay with debts hanging over you, but taking the time to gain an understanding of your income and expenditure (your budget) will allow you to prioritise what you need to spend and cut back on.
Business creditors are more likely to accept offers of repayment if they can see a cash flow projection for the next twelve months. This means you may be able to spread the cost of your repayments to help you cope short-term.
Prioritise your debts
If your business needs a product or service to keep running, prioritise paying these creditors first to ensure you can keep a regular income – this doesn’t mean you can stop paying your other creditors altogether though.
You should talk to your creditors to see if you can spread the cost of your payments but be aware this may affect the amount you pay back long-term. Always read the small print to see if delayed payments will mean added interest and charges.
Don’t take out further debts
One of the most damaging things you can do if your business is struggling is to increase the financial burden on yourself. You may be tempted to take out a loan to cover outstanding debts, but this is not a long-term solution and you should seek help immediately if you’re struggling.