1. Send invoices on time

This may sound obvious, but if you don’t send invoices on time, payment will be delayed, which will impact your cash flow.

If you are not paid in advance, then as soon as the work is completed, send your invoice. If not, you could forget.

Alternatively, send all your invoices out at the same time, such as on the last working day of the month. Setting aside a specific day to send your invoices will mean you are not sending out invoices on an ad hoc basis, making you less likely to miss one.

It also helps to send one invoice per client as opposed to multiple invoices for various different projects and tasks.

2. Keep track of payments

Ensure you know what is due and when, and keep track of any late payments. You can do this by using invoicing software that sends automated reminders before and after payment is due.

Invoice Ninja is a leading free invoicing software for small business invoicing, online payments, tracking expenses and billable tasks. It can help keep track of payments with automatic email reminders and can even automatically include late fees on overdue invoices.

You can sign up for Invoice Ninja for free today. It’s easy to use, can help you get paid faster, and maintain a healthy cash flow in your business.

3. Get paid upfront

It’s not unusual for freelancers to ask for a deposit upfront before starting work on a project, especially for larger projects with a long duration. It could be a 50% deposit, or you could apply milestone invoicing, which means you are paid at set milestones throughout the duration of the project.

Some freelancers ask for 100% upfront payment for smaller paid projects. Getting paid, or at least partially paid upfront, is common for new client projects and helps build trust.

With Invoice Ninja, you can easily convert your client quote to an invoice. When you email quotations to your clients, once they are happy with the details and want to proceed, they can “Click to Approve” the quotation, which converts it into a payable invoice.

4. Seek retainer clients

A retainer client is one that pays you a set fee for a set amount of work each month.

Some retainer agreements work on an ‘on-call’ basis.

Freelancers like long-term retainer clients as they can provide predictability of income. Knowing the income you will receive each month and when also means you can better plan ahead.

This works both ways, i.e. not just for income but for outgoings.

If possible, agree to pay professional service fees, such as accountants, payroll, etc., a set amount for a specific set of deliverables. If you know professional service fees in advance, there will be no hidden surprises or ‘add-ons’ when it comes to settling your bill. 

5. Review contracts

Before you enter into any long-term or annual contracts with suppliers or subscriptions for software, tools or equipment you may use to carry out your business, check out their notice terms.

Can you afford to be stuck with their rate for a long period of time?

Subscriptions and uncompetitive pricing can all cumulatively add a heavy toll to your cash flow, especially if you have to give notice to cancel.

It’s worth reviewing the contracts and plans you currently subscribe to to see if you could get a better deal elsewhere or adopt a pay-as-you-go pricing model.

In business, as in life, it’s the seemingly inconsequential things that can turn into the big things.

6. Productize services

If applicable, consider productizing your service or an element of it. 

Productization involves standardizing a process and selling it at a set price for a set deliverable. It also breaks you out of the charge per hour or per project model.

For example, a personal trainer could sell an online course or pre-recorded training sessions in addition to their day-to-day in-person training.

A copywriter could sell a LinkedIn bio optimization service at a set price. You could even productize your service and sell it as a subscription model. The only limit is your imagination.

Productization allows you to grow and scale and is a great way to optimize cash flow.

7. Discount for fast and early payment

As an incentive for clients to pay you quicker, consider offering a small discount for early payment.

If your payment terms are net 30, which means the payment is due 30 days from the invoice date, you could offer a 5% discount if paid within 10 days. 

Being paid early can make all the difference in periods of negative cash flow. Likewise, you might want to consider adding late payment fees to your freelancer payment terms and conditions.

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A large part of maintaining a positive cash flow in your freelance business is being organized and planning ahead, especially for any potential slow times. Knowing what’s incoming and outgoing and keeping track of your spending are all key factors that will significantly contribute to keeping your business bank account topped up and buoyant.

1. Ask for payment upfront

This may sound obvious, but one way to get paid faster is to simply charge your clients upfront and don’t start work until the money is in the bank. That way, there’s no danger of getting paid late. As soon as the client accepts your quote, invoice them. Even better if you can send it to them via email, and they can pay you at the click of a button.

Because Invoice Ninja integrates with multiple payment gateway providers, it makes it easy and convenient for your clients to pay you. Clients can pay you in just one click, and they don’t even need to leave the Invoice Ninja client-side portal. Seamless, quick and convenient!

If you don’t want to charge 100% upfront, consider a deposit as partial payment, with the final payment due at the end of the project, or use what is sometimes referred to as milestone invoicing, where payments are made throughout the project’s duration.

Once again, with Invoice Ninja, you can easily convert your quote to an invoice. When you email quotations to your clients, once they are happy with the details and want to proceed, they can “Click to Approve” the quotation, which converts it into a payable invoice.

2. Have a virtual tip jar

Virtual tip jars allow your audience, customers and clients to pay you gratuities.

If you’re a creative who regularly shares their content for free, virtual tip jars are a great way for your fans to show their appreciation for your hard work.

You can include a virtual tip jar link on your website, in your email newsletters, share it on your social media channels, and, where applicable, include a link in your social media bios – and even add it to your invoices. 

There are also online platforms such as Buy Me a Coffee and Ko-fi that you can sign up to and direct people to. These sites are great for content creators; you can showcase your skills and products and top up your bank balance at the same time!

3. Create a Pay What You Want offer

If you have a low-tier offer, such as a digital info product, consider applying a ‘Pay What You Want’ price option. This puts your brand in front of people who might not otherwise buy because they’re not sure your product or service is for them—it removes any barrier to entry and acts as a nice taster.

It could also act as a bridge to them buying a higher value offer from you down the line.

It will also give you insights into how to charge your products and services in the future—this is especially valuable if your offer is a new product and you are unsure how best to price it.

While this pricing strategy works on the principle of reciprocity, you should also be aware that while some people may be generous, the price paid could also be zero, so it is probably not workable with high-value products and offers.

4. Encourage early payment, and discourage late payment

Offering a discount to people who pay you before the invoice due date is a great incentive for clients and customers to pay you ahead of time and get your invoices paid faster.

For example, your standard payment term could be Net 30 (meaning the invoice is due within 30 days), and you could apply a percentage discount if it is fully paid within, say, 10 days. With Invoice Ninja, you can set up line-item discounts (aka product-specific discounts) and invoice total discounts.

Just as offering discounts as an incentive, applying late payment fees is an effective disincentive. Naturally, you’ll need to make clear in your payment terms and conditions that late payment fees apply. You should also add a statement to this effect on your invoice.

With Invoice Ninja, you can add late payment fees to your invoice as a percentage or as a set amount.

5. Charge for Discovery Calls

While discovery calls can be free, if they take up a lot of time (money) or effort, consider charging for them-especially for big or high-value projects, where the research, initial call and quote can take some days to prepare.

It can be disappointing when you’ve devoted a lot of time and energy to writing a detailed proposal and having deep-dive calls with a potential client, only for it to come to nothing.

But even for general prospective client calls, you could consider charging a nominal amount to avoid being ghosted at the last minute. As well as a good way to qualify clients, getting a small commitment upfront can result in a bigger commitment later on (i.e. when you close the sale).

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The above strategies depend on your specific business, customer base, and ways of working. There may be other ways you can think of to maintain a healthy cash flow, get paid faster, and help your business thrive, but we hope these helped.

Simply put, cash flow is the money coming in and going out of your business. The aim of your freelance business is to have a positive cash flow. i.e. more cash coming in than going out.

Even if you are forecast to make a profit by the end of the year or have promises from clients for lucrative work in the future, if there is no money in your actual business bank account in real-time to pay your overheads, buy the materials to do your job, keep the lights on, etc., then you have a cash flow problem.

Here are 8 cash flow issues freelancers face and what you can do to negate them.

Not sending out invoices on time

Whether this is down to poor time management, a productivity issue, or simply having too many plates spinning in the air, it’s imperative that you send out invoices on time. A good invoice management system is a must for any business. You need to know and document what needs to be sent out, to whom and by when, and act accordingly.

Obviously, if you don’t send invoices out on time, you won’t get paid on time, which can play havoc with your cash flow.

For regular long-term clients and fixed retainers, consider agreeing on a regular invoicing schedule, for example, a specific date in the month. With Invoice Ninja, you can save time by using the auto-billing feature and automatically bill long-term clients with recurring invoices.

Sending out incorrect information

If you’re not an invoice expert or have never had to send one out before (because you’ve only just started out on your freelance career), then it’s likely you don’t know everything about what’s supposed to be detailed on an invoice and can, as a result, make costly mistakes.

That’s where professional invoice templates come into their own.

Invoice Ninja offers a range of customizable professional invoice templates for you to choose from. And because they are professional invoice templates, they include all the necessary payment fields to enable you to be paid accurately and promptly – even from international clients.

You can try it for free here.

Not agreeing on the deliverables in advance

Before commencing a project, it’s advisable to get everything down in writing to manage the expectations of both parties and act as a document to refer to if any queries crop up during the project’s duration.

This written agreement or proposal should not only outline the objectives of the project and detail the deliverables but also state payment due dates, late payment fees, if you require a deposit in advance, and any refund/cancellation policy. You should also bear in mind that sometimes, by creating detailed line summaries of the project, you can charge more by showing your value and everything you are bringing to the table.

Having just one source of income

Even the most regular, reliable, long-term gigs can terminate abruptly for a myriad of reasons. So, as a freelancer, it’s preferable not to put all your eggs in one basket, or if you do, make sure you have a buffer to turn to should things go pear-shaped.

This might be a passive income stream, a ‘rainy day’ buffer fund, or another skill set you can quickly turn your hand to if needed. If you have just one source of income, it will have a massive impact on your cash flow should it end without notice.

Not knowing costs and overheads

This is something that trips a lot of new freelancers up and can mean that you start off your freelance career on a back foot, forever firefighting and worrying about your finances. This, in turn, can make you take on work you don’t enjoy or pay enough.

It’s essential you know all your costs and overheads before you start, both monthly costs and annual ones. Because if you don’t know your outgoings, how do you know how much you need to survive, let alone make a profit? Therefore, you might find yourself having to adjust your prices upward.

On top of that, it can be awkward to justify big price increases to clients later on down the line without adding any further value.

Slow-paying clients

Slow-paying clients have a habit of turning into non-paying clients if you don’t nip it in the bud from the start.

This might mean you have to assess them in advance and take note of any obvious ‘red flags’ such as lowballing you and trying to negotiate a lower price, being slow to respond to general communications, and being vague on project deliverables and timescales.

Of course, there may be a valid reason why a client is slow to pay. With the Invoice Ninja Pro Plan, you can send out unlimited custom email reminders and bill clients extra for unpaid invoices with its Automatic Late Fees on Unpaid Invoices feature.

Not preparing for quiet times

Most freelancers have experienced the dreaded feast and famine cycle where you have plenty of work one minute and precious little the next. That’s why it’s really important to always have a financial safeguard in place for quieter times.

It might be a cyclical issue pertinent to the industry you work in or simply a lull in the economic cycle, but whatever the reason, always be prepared for it and, ideally, put aside as much as you can afford when you have the chance (rather than unnecessary splurging), because, as they say, ‘the best time to fix the roof is when the sun is shining’.

Having few or zero clients

Finally, the obvious cash flow problem is not having any clients (or not enough), or the wrong kind who frankly don’t pay you very well.

This can be for a number of reasons, but it usually comes down to inadequate marketing and unsuitable client acquisition strategies. For example, are you marketing your services to the wrong clients, is your offer ‘off’, is it a niching issue, or could you be making one of these mistakes?

Ultimately, you’ll want to tackle this issue as a priority as one thing’s for sure: it will severely impact your cash flow!

Fortunately, we’ve put together an article about 5 things you can do to attract your first freelance clients here.

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