Freelancers! Could you use a few cashflow tips to help you start managing your money better?
Many freelancers suffer from the same recurring problem: feast or famine with the work, which leads to constant cashflow issues.
These five cashflow tips should help you…
It's not just managing the cash when there's not much around; it’s about ensuring you have a smooth system for sending invoices and chasing payments, so that it becomes a regular part of your routine.
One of the best ways to do this is to use Xero, which has automatic payment reminders and the ability to send statements to all overdue accounts at once. Automatic bank feeds coming in every day are very useful: no more having to wait until the monthly bank statement arrives in the mail.
One of the best (and most overlooked) ways to get on top of your cashflow is simply to set aside time each week to review your finances.
If you use Xero, you should reconcile your bank accounts at least once a week, preferably twice a week. That provides you with real time data to support your business and helps you become much more efficient.
There are also some great platforms to help you follow up on invoices: Chaser or Debtor Daddy sync with Xero and will send reminders (and even make phone calls!) to clients, to ensure you don't have to make the awkward calls yourself.
Hopefully it doesn’t get to the stage of debt collection but this previous post will help if you need some direction on that.
Depending on your clients’ policies and your relationship with the client, you can avoid the problem of having to collect debts by asking for an upfront payment before you get started.
You may feel that any client who baulks at this request is probably a client you don't want anyway. If they do say ‘no’ and you are prepared to receive payment after completion, make sure you give preference to work for clients with a history of paying you on time.
What do you do when you are in a ‘famine’ period?
For many, it is the chance to put the "lifestyle" back into “lifestyle entrepreneur”: have a holiday, spend time with your family, or just catch up on Game of Thrones.
If you still want to work, this is the perfect time to maintain a schedule, find new clients, spend some time on your business strategy, or review the progress on your goals.
Hopefully, by following these five cashflow tips for freelancers, you will avoid the types of problems you’ve had in the past with your money.
Maintaining consistent cashflow is really a case of preparing for what’s around the corner by having an efficient system in place for managing your money.
And if you are still having problems, perhaps it’s time to go for our sixth tip:
If managing your cashflow becomes too much and you’re unsure what to do, then contact us and we can help you. We can take a fresh look at your cost structures, run the numbers on your pricing, and help you to prepare a proper budget and cashflow projection for your business. Getting your business’ finances under control is our specialty.