Tag: freelance

Undercover (1)

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Home and car

Insurance is what accountants think is dull. But it is vital that freelance creatives get their insurance right. Even the basics of car and home insurance need to be considered.

Iggy Pop famously caused a stink when he started advertising Swiftcover and other musicians discovered that Swiftcover would not cover them. The firm backtracked very fast once the issue hit the headlines. But the example shows why those of us freelancing in the entertainment and media fields need to be very careful to ensure we re covered.

Utmost good faith

There’s no point in lying about what you do. Insurance is based on a principle called “utmost good faith” and lying is not part of that. If you lie, an insurer is entitled to refuse your claim and simply refund you your premium, leaving you uninsured.

For most creative freelances that means using an insurance broker who knows which insurers will happily cover us or who has strong personal relationships with underwriters (the people at insurance companies who decide which risks to cover).

One of the biggest risks is called third-party liability. If you are doing a job and it might involve giving a big-name celebrity a lift in your car or having them round for dinner, you face a huge third-party liability risk. If Elton John has to cancel his world tour because he got whiplash in your car when you ran into the back of someone, your insurance company will have to pay out for the whole cost of the cancelled tour.

So if you are never going to have the likes of Elton John in your car (or home) you need to explain that to your broker, who will explain that to the underwriter, who will then come up with a decent price.

The car’s the star

Most motor policies cover you only for personal use – called social, domestic and pleasure (SDP). Some will include commuting but only to a single fixed place of work. If you need to use your car to go anywhere other than that – and we freelances tend to have lots of other places we need to drive – you need to have business use added on. Technically this is free but insurers generally offer a discount for SDP-only policies, so you will see the premium rise if you want to add business use.

Similarly, you need to let your insurer know if you work from home. There are specialist home/office policies for those running a proper business with staff and equipment from home, but many home insurers can be nudged into adding business use onto their policies at little or no extra cost. But you must tell them

Honesty is the best policy

Telling an insurer all this information often involves more than filling out an online form from one of the price comparison sites. Also, a broker has a professional duty to get you appropriate insurance. They will ask you questions to see if you are risk-adverse or risk-seeking and recommend policies that suit while pointing out any exclusions that help keep the price down – if you store your equipment in an office normally don’t expect it to be covered if you bring it home and it gets stolen or damaged.

There comes a point when it makes more sense to switch to a professional policy for your specific needs – camera cover or a specialist musical instrument policy, for example. But it depends on each individual’s circumstances. Many freelances just need to be open and honest about their work and their insurance needs. A broker will then be able to find the best deal.

David Rogerson of broker Towergate said: “It’s a misunderstanding that if you are in the entertainment trades it will cost you.”

Links (new windows)

Towergate

The taxman cometh (4)

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Choosing your accountant

Choosing the right accountant for you and your business is crucial. You need to be able to trust your accountant to do the best for you, to give you accurate advice and to present your affairs in an honest and accurate manner to the taxman.

Get it wrong and you may face the wrath of HMRC and full-blown investigation into your affairs, in which you will be expected to produce all your records going back years and you may be expected to justify each and every item of spending.

My first recommendation is that you choose professionally qualified and regulated accountant. In effect that either means an ACCA-qualified accountant or, more likely, an ICAEW-qualified accountant. ACCA and ICAEW are accountancy institutes that not only set qualification standards but regulate their members. ACCA members are generally called certified accountants and ICAEW members are called chartered accountants.

"It's fun to charter an accountant.....and sail the wide accountancy" - Monty Python

Be warned: anyone can call themselves an accountant. Many are not qualified or only partially qualified. Only regulated firms come with any official guarantee and back-up – they must carry professional indemnity insurance, for example, to cover any errors or omissions they make.

It has been known for an accountant with a large entertainment-based clientele to come unstuck with the Revenue and have certain expenses challenged. This results in HMRC investigating every single client and demanding back payments of tax for exaggerated expenses claimed.

Why a chartered accountant?

Michael Izza, chief executive of the ICAEW, said: “When hiring an expert for any job, a client wants to know they are buying expertise based on quality, honesty and efficiency. It is also vital that the ‘expert’ is suitably qualified, has undergone the correct training and is subject to some kind of regulation to ensure a high quality of service.  This is true of doctors, teachers and lawyers, and ought to be for accountants too.

“Chartered accountants have all these qualities, and we want people to know that even in their day-to-day life our members can be an invaluable help in saving you money. You can definitely count on a chartered accountant.”

Before becoming a chartered accountant and using the designatory letters ACA or FCA, ICAEW members must:

  • undertake a period of at least three years’ training with an organisation that is authorised by the ICAEW
  • pass exams covering financial management, auditing, business strategy, taxation and IT
  • undertake a programme of Continuing Professional Development, which demonstrates their commitment to high standards.

The ICAEW said it also ensures that chartered accountants develop communication skills, business awareness and professional judgement.

Finding an accountant

To find a chartered accountant, the ICAEW provides a search function on its website (new window), which will list firms by name or location and by their specialist area.

But try to find one that others in your field use. They will know the rules governing your sector and have a good idea of what others like you have successfully claimed as legitimate expenses.

You may also want to think about whether or not you have ambitions to be more successful in the future. Some accountants handle thousands of similar clients sausage factory style – and that may be ideal as it keeps costs low.

But if you hope to be more successful and have a growing income, consider a slightly bigger accountancy practice with a broader range of skills and experience. It will be able to grow with you and provide new, different advice and accounting support as your circumstances change.

And spare a thought for the chartered accountant who really wants to be a lion tamer.

Creative selling (7)

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Closing the deal

In sales jargon making the sale is called the close. And there are a number of ways you can close a sale. You have to judge which is suitable for each particular situation and each client (on the subject of jargon, someone who has not bought from you before is not yet called a customer or a client but a “prospect”).

Here are some types of close

  • Alternative close  - You give the buyer two alternatives: "Shall I deliver on Wednesday or Thursday?", "Would you like part of the order this week and part next or would it be more convenient to send it all at the same time?", "Would you like one or two?".
  • Summary close - Briefly summarise the major benefits, get agreement and start to write out or type up the order.
  • Comparison close - Compare a short list of disadvantages with a longer list of advantages and assume an order to be the logical outcome.
  • Assume order close - Ask a question, such as: "What time is best for delivery?" “When do you want it by?” “When do you need me to start?”
  • Last objection close - Get agreement that, if this one, final, objection can be overcome, an order will follow -  then overcome it.
  • Fear close - Show that some severe loss or inconvenience will result if the order is not placed. This can be used to close on a stall objection, such as "I won’t be able to do it at all if you leave it until next week".
  • Concession close - Offer to make a special concession in the case of this particular buyer.

Getting paid (1)

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Be careful about who you work for

Check out all new clients before you start working for them – avoid the pitfalls of working but not getting paid.

What could be better than getting a new client, you think. Maybe someone rang out of the blue, or emailed, or even called. They saw your name, liked a piece of work or yours, or you were recommended by a colleague – they can even tell you their colleague’s name and you are proud of the connection.

You’re chuffed, flattered, grateful. You could do with a bit more work right now, or you were wondering what you’d do when the current project comes to end. Here’s the answer and you haven’t even had to go looking for it.

But wait. It might be great news, but it might be more trouble than it’s worth. If this is a fly-by-night outfit on one on the verge of bankruptcy, you could be about to commit to working for free with no prospect of ever getting paid.

Credit checks?

Big corporates do credit checks and due diligence before accepting clients. For most of us freelance professionals buying credit reports and seeking references is not realistic. But we can - and should - check out customers before we sign up to work for them. If they don’t pay, or go bust on us, we will have lost out.

Google is your friend. A few minutes should find out a little about this potential new customer. What are people saying about them? Are there any complaints? Check forums, chat rooms, any websites criticising them for not paying their bills or trying to cut down agreed fees after accepting similar work?

Personal contacts are even better – do you know anyone who has worked for them? What were they like to work for, did they pay well and did they pay promptly? Are people still happy to work for them? One reason organisations are often looking for new talent is because they have alienated their old favourites who will not longer work for them – if not, warning bells should sound. Check with your union – have they had to help members squeeze money out of them?

Pay close attention to quickly growing companies or companies that have been, or are being, taken over.

Sooner, rather than later

Do all this before agreeing to work for them – afterwards will be too late. A sensible freelance will also monitor existing customers and review them twice a year. You need to spot if a client is getting into difficulties and adapt accordingly, perhaps billing smaller amounts more often so that, if they do stop paying, you’re left being owed less. Better still, cease working for them before they get into difficulties.

Grade your customers by risk levels and set credit limits and terms for each customer. You might normally expect to be paid 30-days after sending the bill but not every customer has to be treated the same. You might offer to bill monthly instead of weekly, for example, but only if you can be paid within a week. That might save both of you the hassle of dealing with lots of invoices.

There may also be times when you have to ask for payment up front – before you start. This might be part payment in advance and the rest when you finish the job, or, if you are worried about the client, you might ask for full payment in advance. You might even ask clients to apply for credit terms – a child entertainer or magician, for example, might do many jobs based on payment with the booking but have a corporate client that provides regular work who pays on invoice after each performance.

It’s a case of horses for courses.