In between gigs? Here's how to handle cash flow woes
One of the toughest parts about being a freelancer is managing money. If you don’t develop a knack for finding good clients, you may be stuck waiting weeks or even months to get paid—and sometimes you may not get paid at all.
When you get started freelancing, you’ll also find that each publication has its own payment system. Some outlets pay via direct deposit, while others pay via paper checks in sent in snail mail. The latter leads to payment delays if the outlet doesn’t send the check in advance.
In the meantime, you’ve still got to pay taxes, work expenses and invest in upcoming projects. So what do you do to keep your cash flow up while waiting for hard-earned cash? Here are some strategies for maintaining your business while waiting for revenue:
Only work for clients that pay on time
I've talked a bit about this before, but it’s worth mentioning again. Make sure you find good clients who will pay you within 30 days. That way you’ll definitely know when the check will arrive or the deposit will drop.
Read your contract carefully
First of all, always have a contract. Always. And don’t start work until you figure out what your fee is going to be. Once you have that figured out, look at your contract to see when the company will send out the payment. Typically publishers will send out payments within 30 days of the publication date. But if it’s not outlined in the contract, you should definitely invoice for 15 days or sooner than that.
Keep a steady flow of pieces going out
To prevent lags in pay, make sure you’ve got a reserve of story ideas for slower periods. Always have a handful of stories going out, so that you’ll have a stream of cash coming in. If it helps, write a list of potential ideas in one place to keep track of them all.
Get a system for tracking invoices
I prefer using Wave for my invoice and expense tracking needs, but other freelancers prefer services like Quickbooks, Freshbooks or Xero to manage their accounting. Choose whichever makes invoice tracking easiest for you, then make sure you stay on top of upcoming client invoices.
Consider a business credit card
Okay, I know millennials have a reputation for being anti-credit cards (except for some of us that have gone credit card crazy), but hear me out! Compare credit card interest rates at the bank which holds your business account with rates of other card issuers. This comes in handy for unexpected expenses like travel costs, equipment purchases and other business expenses. If you manage it wisely, a credit card can help with those small expenses that creep up in between payments.
What are some of your strategies managing your cash flow? Tell me in a comment or email me firstname.lastname@example.org!