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Cash flow is the difference between having a business and being broke.
If your business – and you- can’t pay its bills when its bills are due, then you have a problem.
(and to those businesses who can pay, and don’t pay, freelancers everywhere tip you into a ball pool of glitter and require you to ask nicely to get our help to get out. Just saying)
Cash flow is the difference between feeling ok when you feel ill about taking time off, and worrying about the bills.
It’s the difference between your energy getting sucked into a black hole because you need to pay the mortgage/vet bill/rent/Net-a-Porter/ASOS and resting easy cause you know the money is there.
Cash flow sounds soooo boring. It sounds like a word that you use to get back to sleep at 3am.
In fact, it’s rather a sexy word.
Cash. We like cash. We LOVE cash.
Flow. We like flow. We LOVE flow.
Cash flow. All the awesomeness of cash with the get-up-and-at-it energy of flow.
Cash flow allows you to pay your bills, to invest in your business, to grow and flow and achieve.
Lack of cash flow is like a dam in your business.
It stops you moving. It restrains your energy, your focus, it saps your concentration.
Lack of cash flow blocks growth, it blocks investment in your business and you.
Which is a right bugger.
I want you and your business to grow, to flourish, for you to achieve what you want to be and do.
Ever the practical woman that I am, I give you 10 Tips To Balance Your Cash Flow To Release Your Growth.
Payment in advance is a good way of balancing cash flow.
It means you have money in now and diversifies how you’re paid, so money comes in even if there are problems with other clients.
(There are lots of other good reasons for doing it but we’re concentrating on cash flow today).
Installments are another way of diversifying how you’re paid.
It means you receive a steadier income than one big payment which is handy for filling in income gaps. At certain times of year you may like to offer payment plans/installments when you know you need a more steady income.
Can you structure your incoming payments so you are paid more when you have higher outgoing bills?
I have my annual bills (insurance, HMRC etc) due at the time of year I receive my peak income.
Look at your seasonal work flow and low income periods. Can you structure your client payments so your income is more balanced out throughout the year?
You need to know your business money data for this. It’s one reason why your accounts and tax return isn’t just about getting the deadlines done, it’s really about you knowing your business money flows (click to download my free Money Systems Audit).
Do you send out invoices promptly? Do you have automatic reminders set up?
Do you know payment practices in your industry so you know who may be bullshitting you when they say X reason why they haven’t paid yet. Do you know your BACS from your CHAPS?
Do you have the basic information on your invoices (name, address, email, phone, web, bank details, date of invoice, date due, methods of payment, terms and conditions etc)? (Click to download my free Invoice Template).
Ask, ask, ask.
Dates, payment terms, amounts, installments. Know your business numbers so you know what you need and ask for it. The worse that can happen is you receive a no and get a valid chance to go onto Instagram for 5 minutes with hashtag #theysaidnosadface.
If it’s one of those months, ask for more time politely or ask for a credit card option. Move money around so you can pay for what you need to. It happens to all of us. It doesn’t mean you need to feel shame.
(True story: it’s easy enough to hit a cash flow problem if 3 of your clients go bankrupt within a month. It’s not common but it does happen)
Be honest. Pay on time as standard. Pay small businesses first, leave corporations until later (but pay them on time too).
If you love a small business, pay them as fast as possible. It makes a difference to how much they love you, their client, and when/if you need more flexibility to pay later on, you’re likely to get it. We can’t help it, a client who pays fast is one we fall in love with just a tiny bit.
When you want to invest in a higher cost service, like high quality coaching or mentoring, and you’re held stuck by worry about the price, be up front and say so.
You may get a ‘no’ but equally, if the coach or mentor/etc wants to work with you, most will negotiate to find a compromise that works for both of you. It may be a payment plan or a different option to what they normally offer, so ask (and yes, I offer payment plans for my higher priced packages).
(By the way, I’m talking about payment plans and credit card options. It doesn’t mean you offer to pay £500 for a £3500 coaching package).
Change your bill dates. The gas bill, the electricity bill, the council tax bill, the phone bill. Ask if you can change the payment date to something that suits you better.
And as an extra bonus, if you have a tax bill and are wondering how you’re going to pay it on time, you have 2 options.
Option 1 – If you have special circumstances (looking after ill family, ill yourself (more than just flu, we’re talking months of serious illness)), write to HMRC and say so. Ask politely for extra time explaining your circumstances, say you can send evidence if requested and say what you can pay and when.
Option 2 – If you didn’t save for tax, didn’t realise you’d get slammed with 18 months of tax at once as a new sole trader (not uncommon) and generally don’t have special circumstances but don’t have the money, write to HMRC and say so. Ask politely for Time To Pay (that’s an official term) and say what you can pay and when. Make a plan to save so this doesn’t happen again.
If you have an accountant, they can do this for you.
These tips are the secret to rocket launching your business as cash flow sorted = business growth.
Is champagne on ice for your freelance growth?