From The Straits Times    |

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The gig economy is all the rage these days, but it isn’t just merely good for picking up a freelance project here and there. It’s also a great way for hardworking, talented women to establish themselves as experts in their chosen fields, earn commissions on equal footing as their male counterparts, and tip the scales back on a horribly skewed wage system.

Besides, with no set hours, no boss and no dress code, it sounds like a dream. But before you quit your job, know that there are some financial pitfalls that could trip you up before you get started. Here are three money steps to take before you embark on a free-wheeling freelance career or side gig.


Work out your equipment costs

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The truism “you gotta spend some to get some” applies here. Simply put, be aware that providing professional freelance services means you have to invest in proper equipment and software. After all, your work needs to be up to standard before your clients can be expected to pay.

Obviously, some trades require higher equipment costs — photography, graphic design and even baking can exact quite a heavy investment, even if you opt to use only beginner tools, or go for second-hand items.

If you can’t afford to outright buy the equipment you need, consider renting them from your more established counterparts. Another option would be to take out a personal loan to buy the tools you need. Pro tip: Should the cost of rental be comparable or higher to the monthly installments on a personal loan, then taking a loan to buy your equipment might make more financial sense.  


Budget for delayed payments

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Perhaps one of the most gratifying things about going freelance is the freedom to choose the clients or projects you want to work on. One of the worst things? Delayed payments.

It’s a sad fact that if your client’s accounts departments are already saddled with payroll, receivables and such, your freelance invoice will often be pushed to the back of the pile. (This goes double if the company you’re dealing with is facing cashflow issues.)

Needless to say, you should always have proper documentation covering your freelancer assignment, so that if push comes to shove, you have some legal standing. However, you should also be prepared for the remote possibility that a client or two stiffs you on payment.

Therefore, always budget your finances with the expectation that your payment will be delayed. Needless to say, don’t rush out and buy that high-end handbag you’ve been eyeing the moment you send off your S$15,000 invoice. Wait till the check actually clears before you even go anywhere near a luxury brand’s store.


Add a mark-up for non-competes

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If your client wants you to sign a non-compete clause, stop and consider whether you should go ahead. Depending on the phase of your career, agreeing to a term like this could harm you more than help you.

A non-compete clause stops you from doing similar work for a competing company operating in the same space. But it doesn’t guarantee that your client will accept every single piece of work you do for them.

Without a non-compete, you’re free to shop a rejected piece to another company, thereby ensuring you get paid for your efforts. But if you’re bound by a non-compete clause, any work later rejected by the client is simply wasted time and labour that you’re not going to get paid for.

To make it worth your while, add a mark-up for agreeing to a non-conflict — anything between 30 per cent and 50 per cent should be sufficient. That way, your client gets the exclusivity they want, while you gain some protection against any potential wasted hours.