Every freelancer knows what it’s like to have cashflow problems. You may have invoices worth thousands of pounds (or dollars) owing to you but your bank account is just about up to its overdraft limit.
Here are a few tips on how you can improve your cashflow:
- Always invoice promptly. The sooner your invoice is with the client, the sooner you should receive your money.
- Make sure your clients pay you by electronic transfer. Payment by cheque can mean a delay of almost a week by the time you’ve received it in the post, gone to the bank, and then waited for the money to clear. And cheques also go missing in the post.
- When you submit your quote for the project, state in your accompanying terms and conditions that you invoice 50% of the project upfront and 50% on completion. If it’s a long project, I generally invoice 1/3 upfront, 1/3 half way through and 1/3 on completion.
- State your payment terms clearly on your invoice (eg: 14 days, 30 days etc).
- When you invoice your client contact, also send a copy of your invoice to the account payables person. (If your contact forgets to pass the invoice on, the accounts payable person will have it in their system.)
- If you haven’t received payment, always chase up and ask when you can expect to be paid. (Some accounts departments wait until they have been chased three times before they action any payment!)
- Try to negotiate a monthly retainer, rather than always being paid on a project by project basis.
- If the project has gone on the back burner but you’ve already completed most of your work, invoice for the time you have already spent. Again, I include this point in my terms and conditions which accompany my quotes.
- Avoid working for companies that are deliberately slow in paying.
What are your tips for improving your cashflow?
Related post: How do you get paid on time?