Being a freelancer gives you freedoms that working for someone else doesn’t. You can work the hours that best suit you, and charge a rate that reflects your value. However, if there’s one thing many freelancers struggle with, it’s ensuring they have constant cash flow. Read on for some strategies designed to help you make that problem a relic of the past.
Something as simple as invoice finance to plug cashflow gaps can significantly impact your daily business operations. Rather than sitting around strapped for cash while your customers take their time paying invoices, you can use the money before it comes in.
This option suits those who have invested heavily in a client, only to discover they lack the cash flow to service their other customers or daily bills. Whether you need financial assistance now or in the future, it can be worth keeping this convenient option in the back of your mind.
Though many companies send out 30-day invoices, that doesn’t mean you have to follow this practice. The smaller the company or business, the more reasonable a shorter deadline becomes.
Don’t be afraid to enforce payment terms that work with your budget, such as 15, 10, or even seven days. You may also be able to negotiate custom deadlines with particular clients, especially if you know they pay within a specific window each month.
If you are about to put several hours and thousands of dollars of resources into a project, don’t be afraid to ask your clients for payment upfront. While you don’t have to obtain payment for the entire project, you can at least request a deposit that allows you to get started.
This option is ideal for freelancers on small budgets with not a lot of financial fat to sustain them through tight times. The more ‘skin in the game’ a client has, the easier it will be for you to deliver their project without a great deal of financial stress.
Even if you have a sound working relationship with a customer, don’t get into the habit of excusing their late payments. Your time is as precious as theirs, and getting paid for it by your deadline is a reasonable expectation.
However, it’s essential to make sure you’ve got a sound foundation for taking action if you are not getting paid on time. Include information on the steps you will take if they don’t pay by the agreed date, and make sure it’s in the contract they sign before work commences.
If there’s one thing many freelancers miss about their old 9-to-5 gigs, it’s the peace of mind associated with a regular paycheck. While you might be in a more financially lucrative situation as a freelancer, income can be inconsistent.
Therefore, it can be worth creating a cash flow statement each month. This statement involves the comparison of your income to your expenses in an average month to ensure you’re going to have enough money to cover all your costs.
A cash flow statement is a more immediate action than profit forecasting and can allow you to make decisions about your income based on your findings.
There’s no denying that freelancing gives you unbelievable flexibility while allowing you to do something you’re genuinely passionate about. However, it also requires you to get serious about your finances. Some of this information above may prove useful for ensuring you’ve got a constant cash flow now and into the future.