Controlling your cashflow is key to freelance success, and there are some hard and fast rules to make sure you do so effectively. It won’t be the best part of your working week, but setting aside a few hours for cash management and admin is crucial.
01. Know your rights
UK law says a payment is considered late after 30 days from invoice. You’re within your rights to add eight per cent plus the Bank of England base rate as a late payment charge, and you can also take your case to the Small Claims Court should payment still not be forthcoming.
02. Keep it real
Ensure you’re paying your outgoing bills with money you actually have – not money you’re expecting to have. This is the key facet of effective cashflow and the one area that can cause debt headaches and financial hiccups.
03. Stay on track
Measure your cashflow regularly using a proper system, whether it’s a Google Doc or something more professional. Being able to quickly and regularly check your cashflow saves you a lot of time, effort, and potentially bank charges, in the long term.
04. Timely invoices
Schedule time each week to check in on and chase invoices, and send invoices immediately after a project is received and signed off. By delaying invoicing, you’re delaying your pay date.
05. Improve your receivables
Lots of businesses and wholesalers offer a small discount for early payment. If you factor this discount in to your quotation and subsequent invoicing – taking into account how much you want to get paid – you effectively create a late-payment fine at no extra cost, and will save yourself hassle later on.
This is an excerpt from an article originally published in Computer Arts magazine issue 259, buy it here (opens in new tab)