When you are self-employed, a reliable weekly, biweekly or monthly check is not always a possibility. Instead, your income probably fluctuates a lot every month and throughout the year. So how can you stay on top of your bills and avoid debt or falling behind on payments? One solution is to learn how to adjust your billing cycles.
Understand Billing Cycles
Before you can adjust your billing cycles, you have to understand how they work. A billing cycle is the time that elapses from your last bill to the next one. In most cases, these cycles are monthly, but they can vary. Usually, you do not have control over your billing terms and have to comply with what a company dictates. However, there are circumstances that allow you to make adjustments.
Often, your billing cycle depends on when you started a service or paid for something for the first time. A company uses the start date to calculate when to send you the bill. Then, it continues sending bills based on this initial date. Most cycles are 30 days, but some may be less.
You can use Excel or Numbers to keep track of your billing cycles, so you do not miss any payments. It is a good idea to put everything into one spreadsheet to make it easier to see the days your bills are due and to see what you would like to change.
Find Alternative Billing Cycles
In some cases, a company has a date for bills that it can change if you ask. For example, many car insurance companies use alternative billing cycles. The plans may include one-pay, two-pay, four-pay and monthly options. In a one-pay plan, you would pay the entire insurance bill at once. In a two-pay plan, you would split into two pieces. In a four-pay plan, it would split into four pieces. Monthly plans allow you to pay a small amount of the insurance bill every month.
You should talk to your insurance agent to find out more about the alternative billing cycles the company offers. Your other service providers may also have similar plans, so it is worth taking the time to call and ask them.
If you are wondering what you should say, keep it simple. For instance, when you call a credit card company to change the billing date, you should know what day you prefer and why. There is no need to go into long explanations. Some credit cards even let you adjust the date online without needing a phone call.
Figure Out the Best Days
As a self-employed individual, your income may vary considerably, so you have to think about the best days to make payments. For some people, the traditional first or second day of the month may not be the right option to pay bills. Instead, you may prefer to pick a date in the middle of the month or at the end. The key is to find the best option for billing that works with your income.
Some people prefer to space out their bills and have them trickle in throughout the month. Others would rather pay all the bills together on one day and not worry about forgetting anything. There is no right or wrong method as long as all the bills are paid on time.
Adjust Your Own Payments
If you cannot change billing cycles for your phone, cable, electricity or other services, you may have to make changes in how you receive income. In general, many self-employed workers do not think about having set days to get paid because they are focused on getting the money. However, you may need to adjust your contracts to make sure you are paid on specific dates during the month.
How and when you receive money has a direct impact on your ability to pay others. You may need to think carefully about your daily, weekly or monthly income to figure this out. Consider using spreadsheets and an online calendar to track all the payments.
Look for Other Options
Although changing your billing cycles can help, you may need to go beyond this step to stay ahead of your bills. Have you considered increasing your income by getting a side gig or another job? Are you able to charge more for your current services as a self-employed worker?
When your income increases, it is easier to pay the bills and avoid problems. You will not have to worry as much about individual billing cycles since you will always have more than enough money to pay them every month. The stress and anxiety associated with not having enough for bills will go away.
Another option is to look carefully at your current billing cycles and think about cutting some services. Do you really need extra phone lines or cable? Are you paying for luxuries you rarely use? Cutting out services is not an easy process since you get used to having them, but it can save you money long-term and make it easier to pay for necessities.
The key is to find a balance between your income and expenses. You must have the basics, such as shelter, food, water, electricity and other items covered. However, you also need to have some joy in your life, so luxuries like a smartphone may also feel necessary. If you consistently restrict yourself too much, life may start to feel boring and miserable. Your goal is to figure out how to pay for what you need with a little extra for fun expenses but without going overboard.
It may be possible to adjust your billing cycles. You have to take the initiative to call, ask or email the companies and ask for an adjustment. They will not make the changes without you taking the first steps. You also have to figure out how to combine or stagger your bills throughout the month, so it is easier to pay them and avoid late fees.