How to plan for quieter months when you work for yourself
To plan for quieter months, forecast when money is likely to come into your account, and when bills, tax and household spending will go out. Carry whatever is left into the next month. Then test what happens if a client pays late or work you were expecting falls through.
You don’t need to predict every invoice perfectly. What you need is a picture you can update, based on when payments arrive rather than when work is booked.
Start with money arriving, not work booked
List the payments you expect to receive by the month they’re likely to be paid. Keep confirmed invoices separate from work you’re hoping for. Then list what’s going out, by the date it’s paid:
business costs
essential withdrawals for household spending
tax payments
other commitments
The profit in your accounts and the cash you have available can be different. Under the cash basis, much of the tax calculation depends on the money you receive and pay out. Traditional accounting counts income and costs differently. Whichever method you use, your cash plan still needs the actual dates you expect payments to happen. HMRC: cash basis.
Carry the balance forward
Here’s an illustrative three-month plan. Tax savings are held separately and excluded from the opening balance.
Month | Opening available cash | Receipts | Business costs and household withdrawals | Closing cash |
|---|---|---|---|---|
October | £4,000 | £5,000 | £3,000 | £6,000 |
November | £6,000 | £1,000 | £3,000 | £4,000 |
December | £4,000 | £0 | £3,000 | £1,000 |
The year may be profitable, but December leaves very little room for an unexpected cost. What if an invoice is delayed, or sales are lower? Run the same exercise again to find out. It shows where you may need to act before the account runs low.
Give known dips their own plan
A regular seasonal slowdown is something you can budget for. So is a holiday. An emergency buffer has a different job. It’s for things you couldn’t reasonably schedule.
Possible responses include:
moving optional spending
agreeing payment milestones on new contracts
checking overdue invoices
building up cash in busier months
These are choices to weigh up. They aren’t a promise that working harder can close every cash-flow gap.
Keep tax dates visible
Put your Self Assessment payments into the forecast. Include payments on account if you have to make them. These are advance payments towards your tax bill. If you genuinely expect your tax to fall, check whether you can reduce your payments on account. If you can’t pay a bill, contact HMRC early to ask what arrangements are available. HMRC: payments on account, payment difficulties.
A short review each month can be enough to keep the plan useful. Update what you’ve received, swap estimates for actual numbers and look ahead to your lowest balance. That lowest point often tells you more than your busiest month ever could.
