Embarking on a freelance career in the Philippines offers numerous benefits, such as flexibility, autonomy, and the ability to pursue your passion. However, the shift from traditional employment to freelancing often comes with the added responsibility of managing your financial resources.
Surprisingly, many freelancers lack the knowledge and skills to effectively manage their finances, which can hinder their ability to grow their businesses.
Financial resources encompass the assets, funds, and capital required to invest in essential aspects of your business, such as equipment, marketing, and professional development. Managing these resources is crucial for long-term success in the increasingly competitive freelancing landscape.
This article aims to fill the knowledge gap and provide valuable insights into the sources of financial resources and a list of common financial resources to fund your freelance business in the Philippines.
Financial Resources: A Definition
Financial resources are what you refer to as the monetary assets, capital, and funds available to you for managing your financial obligations and investing in growth opportunities. You can acquire these resources through various sources, such as personal savings, loans, investments, or revenue from your services.
Effectively managing your financial resources is essential for ensuring the sustainability and success of your freelance business, as it enables you to meet your ongoing expenses, invest in growth opportunities, and maintain a healthy cash flow.
Sources of Financial Resources
Financial resources can be broadly categorized into two primary sources: internal and external. Each source has its advantages and disadvantages, and identifying the differences can help you make more informed decisions on which to rely for funding your freelance business.
- Internal Source
Internal sources of financial resources refer to the funds that come from your business or personal resources. These can include your savings, retained earnings, or even the revenue generated from your freelance services.
Utilizing internal sources allows you to maintain full financial control over your freelance business and minimize the need for support from external parties. However, it may also limit your growth potential if your resources are insufficient to meet your business demands.
- External Source
External sources of financial resources, on the other hand, are funds from outside your business. This can include bank loans, lines of credit, investments from friends or family, or even crowdfunding.
External sources can significantly boost your business capital and allow for faster growth, but they may also come with strings attached. You may need to share control over your business, pay interest on loans, or meet specific performance milestones.
How to Finance Your Business: Common Sources of Financing
Understanding the different financial resources is critical to ensuring the continuous growth of your business. Diversifying your funding sources can help you maintain stability and reduce dependency on any single source.
This section will discuss some of the most common financial resources you can use to fund your freelance business.
1. Personal savings
Using your own savings to invest in your freelance business is a popular and straightforward option, as it does not involve sharing control with others or paying interest. This method allows you to maintain full ownership of your business and make decisions without external influence.
WHAT YOU SHOULD KNOW: Relying solely on personal savings may limit your business’s growth potential if your resources are insufficient to cover all expenses and investments.
2. Bank credit or loans
Banks and other financial institutions can provide loans or lines of credit that can help you fund your business expenses. These options can offer substantial financial aid, enabling you to invest in equipment, marketing, or professional development.
WHAT YOU SHOULD KNOW: Bank loans and credit lines typically come with interest rates and repayment terms, which may add to your financial burden. It’s essential to make financial assessments before taking on loans or credit.
3. Diversified Income
On top of your freelance business, you can generate more money by diversifying your income. Income diversification means generating money from various sources rather than relying on a single source or stream.
For example, if your main income generator is your graphic design services, you can diversify your income by selling your digital products through your website or teaching online classes to students.
WHAT YOU SHOULD KNOW: Diversifying your income requires patience and persistence. The more services you offer, the more money you can potentially earn.
Friends, family, or other investors may be willing to fund your business in exchange for equity or a share of future profits. This option can help you raise substantial capital, allowing you to invest more aggressively in your business’s growth.
WHAT YOU SHOULD KNOW: Accepting investments often involve sharing control of your business and making decisions with your investors’ interests in mind. It’s crucial to consider the long-term implications and ensure that your goals are aligned with those of your investors.
Crowdfunding can help you raise funds from many people who believe in your business idea or your skills as a freelancer. This method can be a powerful way to generate financial support while building a community of loyal supporters invested in your success.
WHAT YOU SHOULD KNOW: Successful crowdfunding campaigns require a compelling pitch, strategic marketing efforts, and consistent communication with your backers. Make sure you already have these requirements ready before seeking support through crowdfunding.
6. Government grants and programs
Exploring government-backed programs that provide financial assistance or grants specifically designed to support freelancers or small businesses in the Philippines can be a valuable option. These programs may offer funding without the need for repayment or sharing control of your business.
WHAT YOU SHOULD KNOW: Securing government grants can be a competitive process that requires meeting specific eligibility criteria and submitting thorough applications. It’s essential to research available programs and prepare a solid application to increase your chances of success.
Financial Resources Management Tips
Effective financial resources management has become an indispensable skill for Filipino freelancers. If this concept is new to you, here are money management tips to help you get started.
- Obtaining financial resources
It’s essential to clearly understand your financial needs before approaching any funding source. Create a comprehensive plan outlining the amount of funding required, the purpose of the funds, and a strategy for repaying loans or generating returns on investments. When you present a well-thought-out plan, you can increase your chances of securing the financial resources you need.
- Keeping track of financial resources
Develop a system for tracking your income and expenses, including using accounting software, spreadsheets, or even a simple pen and paper. Regularly monitoring your financial resources will help you identify areas where you can save money, optimize spending, and allocate resources efficiently.
In addition to tracking your finances, reviewing your financial statements regularly is essential. Analyzing your cash flow, balance sheet, and income statement can provide valuable insights into your financial health and help you make informed decisions on managing your resources.
- Predicting organizational costs
Accurately estimating your expenses enables you to allocate resources effectively and avoid financial difficulties. Consider fixed and variable costs, such as rent, utilities, salaries, and project-specific expenses.
When predicting costs, it’s crucial to be realistic and consider potential fluctuations in the market or unforeseen expenses. Regularly updating your cost projections and adjusting your financial plan accordingly can help you stay prepared for any changes in your financial situation.
- Maintaining a balance of resources
Aim to balance utilizing your resources for immediate necessities and investing in opportunities that foster long-term growth. This might include allocating a percentage of your income to an emergency fund or giving precedence to investments with the potential for long-term returns.
- Deciding how the money will be spent
Establish a clear set of priorities based on your financial objectives and allocate your funds accordingly. This may involve investing in new equipment, marketing efforts, professional development, or other essential business expenses.
When making spending decisions, consider the potential return on investment (ROI) and the overall impact on your business’s financial health. Prioritize spending that can generate long-term growth or improve your financial stability. By making informed decisions on how to allocate your financial resources, you can optimize your financial management and set your business up for success.
Managing Financial Resources for Business Success
Managing your financial resources can be daunting especially when you don’t have the right tools. This is where financial management platforms come in: they can help you stay organized, monitor your finances in real-time, make better decisions, reduce errors, and gain greater visibility into your financial situation.
Beppo: The All-in-One Solution to Managing Your Financial Resources
Freelancers in the Philippines leverage Beppo, the all-around financial planning, budgeting, and management app that allows you to stay on top of your financial resources more effectively, save time and reduce stress, and ultimately achieve greater financial success.
You can benefit from using Beppo in several ways:
First, Beppo can help you track your income and expenses more easily. It can provide you with insights into your spending habits. This allows you to identify areas where you can cut costs and save money.
Aside from that, Beppo can help you create and manage invoices more efficiently. You can create customized invoices and send them to your clients directly from the app. You can also set up automatic reminders, minimizing the risk of late payments and therefore improving your cash flow.
Likewise, you can take advantage of Beppo’s credit scoring feature. Most financing institutions flag self-employed individuals as high-risk because they do not have a stable source of income. But since Beppo can already determine your credit score, you can directly seek funding from the app when you need it.
What freelancers love the most about Beppo is it can help pay your taxes and project how much you need to pay next quarter. The app can generate tax reports for you, allowing you to have more time for more important errands. If tax filing is new to you, you can get assistance from its experts or within its in-app community.
Beppo Features: The Power of 12
Beppo app users get exclusive features that no other platform can. Discover the powerful features you can leverage below:
- Freelancer Credit Card: Beppo’s credit card feature can help those who have trouble obtaining credit cards from traditional banks. Take note that terms and conditions apply when using this feature.
- Multi-currency Invoicing: Invoice clients in their local currency. You can also directly collect international payments from the invoice, saving time and effort.
- Recurring Invoices: Easily set up and schedule sending invoices to the same client regularly. This feature removes the hassle of sending recurring invoices manually.
- Automatic Invoice Payment: Enable “Vaulting” mode on recurring invoices to allow clients to pay you automatically based on the set due date and stored bank details.
- Automatic Payment Reminders: Automatically send reminders to clients when payments are almost due or overdue.
- Advance Invoice Payment Collection: Get an advance payment on your invoices with minimal fees. This feature can be a real lifesaver when you need money quickly.
- GCash Integration: Beppo integrates with GCash, making it easier for you to track your finances and make transactions.
- Marketplace: Access discounted financial products and services through Beppo’s Marketplace feature, including accounting, tax preparation, insurance, and financial consulting.
- Customized Budget Tracker: Create a personal budgeting cycle that fits your specific needs. This ensures you stay within your budget and avoid overspending.
- Advanced Templates: Beppo offers ready-made templates that can help you scale your business. You can use templates ranging from service agreements to project proposals.
- Beppo Academy: Beppo Academy offers you access to advanced content that can help you grow your freelancing business. This feature helps address the need for continuous learning and upskilling from marketing strategies to financial management.
- Chat Support: Get real-time help and support, whether you have a question about the app or need tax assistance.
No Better Time to Start Managing Your Resources than Now
Managing financial resources effectively is essential for achieving your financial goals. Adopting a disciplined and strategic approach to financial management can optimize your resources, reduce costs, and achieve long-term financial stability.