One of the biggest challenges as a freelancer is being able to stabilize your cash flow. Some weeks you might have plenty of clients’ requests that net you a lot of income, but other weeks might be incredibly slow to a point that you struggle with your daily expenses. Budgeting correctly will help you mitigate most of your financial worries as a freelancer, but it doesn’t get rid of the problem.
So in this post, we’re going to take a look at some ways to help you stabilize your cash flow as a freelancer. With some practice, you’ll be able to smooth out your cash flow without having to work ludicrous hours one week and have absolutely no work another week.
Consider using a cash flow service
There are cash flow services that can help you ensure that you’ve got a steady flow of money. Cashflow Finance is a good example of a company that can assist you in this. You simply invoice your clients for the goods or services they’ve paid for, send the invoice to the company, then you receive 90% of the invoice amount in just a few hours. The invoice will then be the responsibility of the company and you’ll receive the remaining 10% once the customer has paid. It’s a simple and easy way to ensure that you get your money from late clients.
Tighten up your payment terms
A good way to ensure a steady flow of cash from your freelancing business is to tighten up your payment terms. For instance, you can attempt to enforce a 7 or 15-day payment policy so that your clients are always forced to pay on time. You can enforce all kinds of penalties for failing to pay this, especially if you receive legal assistance. By setting aggressive rules, you might scare off certain clients from working with you, but it does show that you’re serious and will help to ensure that you’re always paid on time. As long as you draw up a contract before you start doing any work, you’ll be able to legally enforce your terms.
Ask for half the payment upfront
An increasingly popular way of invoicing your clients is to request half of the payment upfront for a commission or job. This is a great way to get some payment for the project itself or to pay for your daily expenses while you carry out the job. You don’t have to request half of the payment (you can easily adjust this to whatever percentage you think is fair) but it’s a good way to secure some extra money. It’s generally agreed by most freelancers that you should always ask for an upfront payment with new clients. This will help provide a bit of extra security for when you work with someone you’re unfamiliar with. However, if you know that a client always pays on time, then you can make this an optional rule as part of your payment terms.