‘Getting down to business’ these days increasingly involves pulling out your tech and going online from anywhere, at any time.
Much has been written about the massive boom in remote working and highly fluid workforces operating across vast geographical areas, including continent to continent! At the core of this is a growing army of freelancers, who increasingly rely on their devices for their livelihood. Not surprisingly, freelancers and digital banking are a match made in heaven!
This guide looks at the best ways for freelancers to set up and run bank accounts in the digital age.
Freelancers are far from alone
Let’s start by putting this into context. If you’re already ‘going it alone’ in your career, and offering your services on a self-employed basis, you are ahead of a dramatic curve.
There are some truly awe-inspiring statistics on this topic. For example, in 2018, there was a massive 31% increase in the number of people aiming to transition into freelance working. The list of professions this encompasses is diverse, from dog walkers to interim CEOs, and from mobile beauticians to firefighting Finance Directors.
As a result of this new willingness to ‘go it alone’, there are around 4.8 million people who are self-employed in the UK, contributing an impressive £275 billion to the UK economy.
It’s certain that the figures for 2019-20 will top that too!
What you need to support freelancing
The significant rise in people working on a freelance basis is not just about personal choice. It has been facilitated by technology, of course, and the Internet of Things. You can be connected and working from any location, and remote communication and collaboration have never been more accessible.
Employers have grabbed the opportunities this presents with great gusto. They can manage salary bills, workloads, and office space far more cost-efficiently by calling in freelancers’ services.
However, freelancing is not always without its issues, including pressure on time. If your income is solely dependent on how many hours you manage to work, time is of the essence!
This means that anything that makes life easier and more convenient for freelancers is warmly welcomed, including the rise of digital banks.
It is quick and easy to open an account with a digital bank, and you can do it at any time using your device. Unlike some traditional financial service organizations, there are no complicated forms or interviews involved!
Then, running your business from a digital bank is also straightforward and can save you money.
Why freelancers benefit from digital banking
The synergies between people who use devices for a living and an application-based bank’s services are clear. Managing your finances using their mobile technology – smartphones, tablets, and even wearables – gives you around the clock control and accountability.
Digital banks – with their low overheads – are often highly competitive on business banking fees too, which helps sole traders make every penny count.
If you are someone who travels a lot to fulfill freelance contracts, the benefits grow exponentially. For example, digital banks often offer favorable currency exchange rates compared to traditional travel money sources. So, you could save considerable amounts of money (and hassle) by using a digital bank to manage business cash as you cross international borders.
You can also streamline your bill paying, budgeting, and travel arrangements on your device, keeping check of itineraries and costs at a glance. This makes overspending or some other error in your financial arrangements less likely.
The best digital banks for freelancers
It’s worth covering the difference between online banking and digital banking.
The basic definition of this breed of bank is that it is entirely based in the digital realm, and offers all financial services transactions via a cloud-based, secure app. They are often referred to as Challenger Banks, as they are a direct alternative to traditional lending and investment sources.
Some of the longest established – including Monzo, MyBank, N26, and Starling Bank – have full banking licenses and are bona fide ‘New Banks’. Others are sometimes referred to as ‘Neo Banks’, as they are digital banks backed by licensed organizations (such as WeBank by Tencent, Moven, and Yolt).
As the big players in lending and investment respond, there are increasing numbers of ‘Beta Banks’ that operate as a joint venture – or subsidiary – of traditional banks (for example, AiBank and Simple).
If you hear the term ‘Non-Banks’, it covers financial service providers covered by something other than a bank license, such as Monese.
Each digital bank’s services vary, so freelancers need to shop around for the one that best suits their specific trade sector, operational size, and way of working.
For example, some digital banks – including Revolut – can be integrated with relevant apps and software that offer bookkeeping and expense management functions. This further streamlines your ability to manage your money as a freelancer.
Some challenger banks issue debit cards to account holders, free of fees, that can be used by freelance project teams to cover expenses from a business account. These include some contactless debit cards.
There are digital banks that enable cash withdrawals from ATMs too, though fees may apply.
Largely though, the benefits revolve around the entirely digitalized services they provide, including options to apply for loans for business purposes. Many offer you the opportunity to organize all your funds into separate digital ‘pots’ to make money management more comfortable and intuitive.
Some of the best digital banks for freelancers issue regular spending notifications to help you to keep track of expenses, project budgets, and your financial health!
One of the best options for self-employed businesspeople is Holvi. This digital bank has geared much of its offering around the tools and functions needed to run a business.
Neo bank qonto.eu has also purposely created a service that matches the needs of freelancers, small businesses, and new start-ups.
Alternatively, you may be more interested in seeking out digital banks that offer great currency conversions terms for freelancers who operate internationally.
Our site can help you to pick the best digital bank for your specific freelance needs.