How self-employed entrepreneurs can get a grip on their finances and get out of debt.

As a self-employed person or freelancer, you enjoy the freedom of independent entrepreneurship, but that freedom also entails risks. Without a fixed income, social security and with unpredictable income, it can be difficult to remain financially stable. Many self-employed people have to deal with debts, for example due to disappointing assignments, unexpected costs or insufficient reserves for taxes. How do you ensure that you get out of debt and improve your financial situation as a self-employed person in a sustainable way? In this blog, we discuss the main causes of financial problems and practical solutions for self-employed entrepreneurs.

Common causes of financial problems among self-employed people

As a self-employed person, you are responsible for your own finances. This can lead to debts if there is no good financial buffer or if payments are not made. Common causes are:

• Irregular income

  • Self-employed people often have to deal with fluctuating incomes. In good months everything seems to go smoothly, but in less good months it can be difficult to cover fixed costs.

• No reservations for taxes

  • Many self-employed people forget to set aside VAT and income tax, which means they receive a large assessment when they file their tax return that they cannot pay immediately.

• Long-term or unpaid invoices

  • Some customers may not pay for 30 to 60 days or not at all, leaving your income uncertain.

• Unforeseen expenses

  • Costs for equipment, software, insurance or sudden medical expenses can quickly add up and disrupt cash flow.

• Too few orders or turnover

  • When orders decline, for example due to economic conditions or competition, it can be difficult to continue paying fixed costs.

Without proper financial planning and a buffer, these problems can lead to payment arrears and mounting debts.

Create financial overview

To get a grip on your finances, it is crucial to have an overview of your income and expenses.

• Map out all your debts

  • Make a list of outstanding invoices, loans and payment obligations.
  • See which debts have priority and which you can pay off in installments.

• Analyze your cash flow

  • How much money comes in per month?
  • What are your fixed costs (rent, insurance, software, subscriptions, etc.)?

• Create a monthly budget

  • Draw up a realistic budget in which your income and expenditure are properly aligned.
  • Set aside a fixed percentage of your turnover for taxes and unforeseen costs.

With a clear financial overview you avoid surprises and can deal with your money more consciously.

Improve your cash flow and income

Many freelancers get into trouble because payments are not made or orders are reduced. This is what you can do to improve your cash flow:

• Invoice faster and set clear payment terms

  • Don't wait until the end of the month to invoice.
  • Work with shorter payment terms (for example 14 days instead of 30).
  • Send a reminder immediately if a payment is overdue.

• Use factoring or prepayment

  • Consider factoring: a party that pays your invoices directly and takes over the risk of non-payment.
  • For large orders, ask for an advance payment so that you are not paid afterwards.

• Diversify your income

  • See if you can offer additional services or products, such as coaching, online courses or digital downloads.
  • Work on multiple revenue streams to reduce dependency on one type of customer.

By implementing these strategies, you ensure that you have access to your money sooner and run less risk of liquidity problems.

Limit and spread your costs

Besides increasing your income, you can also cut back on expenses to avoid financial problems.

• Take a critical look at your fixed costs

  • Do you really need all the subscriptions and tools you use?
  • Can you find cheaper alternatives for software, insurance or business expenses?

• Consider co-working spaces or working from home

  • If you rent an office, a co-working space or working from home can save costs.

• Avoid impulsive business purchases

  • Ask yourself: is this investment really necessary, or can it be done later?

By being smarter about your spending, you will have more money left over for important expenses and to pay off any debts.

Discuss payment arrangements with creditors

Do you have payment arrears with suppliers, the Tax Authorities or other authorities? Contact them in time and try to make agreements:

• Belastingdienst

  • Request a payment arrangement for outstanding VAT or income tax debts.

• Suppliers and landlords

  • Check whether there is room for installment payments or discounts for early payment.

• Bank and lenders

  • Discuss whether restructuring a loan is possible to reduce monthly payments.

Many creditors are willing to cooperate if you show that you are serious about finding a solution.

Seek professional debt assistance

If the financial problems become too great, it may be wise to consult a debt counselor or financial advisor.

• Structuring debts

  • An expert will help you prioritize debts and draw up a repayment plan.

• Negotiations with creditors

  • Debt counselors have experience with payment arrangements and mediation with creditors.

• Advice on restructuring or bankruptcy alternatives

  • In some cases a restart or fresh start is possible.

By seeking help in a timely manner, you increase the chance that your company can continue to exist and become financially healthy.

Request help

Do you recognize yourself in (part of) this situation and do you no longer want to walk around with worries? We are ready to help you. Do not wait until the problems escalate and take control of your financial future today. Click on the button 'Request debt assistance now' and take the first, important step towards peace and security for you and your company.