As a freelancer, how do you manage your cash flow?

Working as a freelancer has a number of benefits, including more flexibility, the ability to be your own boss, and more control over your career. Many freelancers, however, are aware that working in this manner can be difficult during times of financial uncertainty.

If you want to flourish as a freelancer, managing your cash flow is critical, and it relieves the burden of thinking about paying your payments each month. Although there is no assurance that freelancers will receive a consistent, regular paycheck, there are a number of techniques that can help you manage your cash flow and make the most of your time as a freelancer.

If you're a freelancer (or planning to be one in the near future), check out our top suggestions for managing cash flow and staying on top of your money.

Receive quick payment

Many freelancers know how difficult it is to chase down invoices, but getting paid on time is critical when you have rent and expenses to pay. As a freelancer, one of the greatest methods to manage cash flow is to make sure you get paid on time. There are various ways to do this, including:

Payment terms that are clear

Don't be scared to set stricter payment conditions; just because other freelancers accept 30 days for payment doesn't mean you have to. Include clear payment terms in your invoice, and if necessary, lower the payment period to 15 days.

Pay attention to late payments.

You might be able to overlook a single late payment, but don't let it become a pattern for how you do business. If a client's payment is past due (or continues to be late), you should stop working for them until the money is received. As a freelancer, your time is equally precious, and there's no reason why you should have to work for nothing.

Payments made in advance

If you want to improve the consistency of your cash flow, ask for payments in advance. If necessary, emphasise how this peace of mind will help you produce better work. After all, no one can work at their best if they're stressed out over unpaid invoices.

Make a cash flow statement for your business.

A cash flow statement is just a record of revenue and expenses that can be easily created with the help of a spreadsheet programme. Make two columns: one for monthly revenue and the other for monthly expenses.

List the necessary expenses first (for example, rent, bills, and food), and then check how much money is left over. Laying out your finances in black and white is a great method to keep track of your cash flow and avoid running out of money. Many people feel that if they can see their incoming and departing financial flow, they are less likely to make an excessive purchase.

As a freelancer, there are various simple apps available to assist you manage your cash flow, and you'll be able to adjust spending on your phone while you're on the go.

Forecasting cash flow

Our final piece of advice for managing cash flow as a freelancer is to forecast it. Freelance employment is inherently unpredictable; you can have a few months when you're able to make a lot of money, followed by a period where you're unable to find work. A cash flow prediction allows you to prepare for the future and guarantee that you have enough money for necessities when you need them.

Cash flow forecasting assists freelancers in balancing expected future revenue with anticipated future expenses. It's also a terrific technique to help save money during more prosperous times (for example if you know you have a lot of work coming up in two months, you can plan to put some money away).

Forecasting for the future also allows you to budget for one-time expenses, such as a vacation or a car MOT. There are a number of tools and software programmes available for cash forecasting and scenario planning, so you can get a clear picture of your future finances.

Personal Accountants & Tax Services by Cruse Burke

Are you a freelancer in need of financial assistance? CruseBurke Chartered Accountants can provide you with a variety of personal tax and accounting services. With our retirement planning services, we can help you plan for the future, relieve the stress of filing a self-assessment tax return, or provide professional guidance and advice on personal tax.

We can devise a strategy to assist you manage your cash flow as a freelancer, reduce your tax liabilities, and make sure you pay all personal taxes on time. Give us a call or Contact us today for more information about our personal tax services or to discuss your requirements.

Accountants in Croydon help small businesses and startups with their accounting and taxation matters, to keep their business running smoothly.