Freelancing tends to be incredibly difficult at the start because securing a regular income involves working with many different clients and completing many different jobs at the same time. Once you’ve built a solid list of clients and are charging enough to make it worth your time, you can start stabilizing your cash flow and adjusting the amount of work you take with your free time and other commitments. However, getting to that point is difficult and it’s not immediately obvious how you can start stabilizing your cash flow.
So in this post, we’ll be looking at a couple of ways for a new freelancer to smooth out their income so that they can keep their business running without risking their livelihood.
Get to know your clients and their invoicing habits
If you provide a service that sees repeat use from clients, then it’s worth creating a little document or spreadsheet to keep track of each client and their invoicing habits. Write down who the client is, how long it takes for them to pay their invoices and how reliable they are with sticking to their payment deadlines. From this information, you’ll be able to tell who the most reliable clients are and who you should be focusing on if you want to generate a steady flow of cash.
When you’re faced with the opportunity of working with a regular reliable client and someone that has consistently paid late every time, you should always go with establishing a steady relationship with your best clients. Getting to know your clients also enables you to provide the best service possible for their needs. Customizing your approach to fit the client’s needs will help ensure that they come back to you in the future if they need further assistance or work.
Maintaining your productivity
One of the key ways to maintain a steady flow of cash is to maintain a steady level of productivity. Many new freelancers find it difficult to sit down and work for long periods of time because they usually have the freedom to do the work whenever they want. In the beginning, this freedom can be liberating but it’ll quickly start to put pressure on you to meet client deadlines.
In order to boost your productivity, you have to start thinking about your freelancing career more like a job. This means you should be setting in-office hours so that you can dedicate a portion of your day to completing your work. It doesn’t matter if this is 3 hours or 7 hours, you need to get your mind and body used to a work period much like you would with a regular job. Once your work time is over, it’s time to relax your mind and stop answering calls and emails because you’re officially out of your work hours. Of course, you could still answer calls or respond to emails if they’re urgent, but the point is to establish a period of work in your day so you can focus and block out potential distractions.
Consider invoice factoring if you have trouble with clients
You’ll often encounter clients that frequently pay late, but there are also some clients that will refuse to pay the agreed amount or even purposely try to get out of paying even though you’ve provided them with the work already. Some might even request extra work for the price they’ve paid. These kinds of situations are always unpleasant since you should’ve agreed to a contract in the first place. However, new freelancers may get themselves into a difficult situation like this. For the sake of growing their brand, they may be convinced to do extra work for free or they might think that late invoicing is just something freelancers have to deal with.
But it doesn’t have to be like that. Invoice factoring is a form of insurance against late-paying clients and people that refuse to compensate you for your work. It works by selling the value of your outstanding invoices to a third-party company known as a factor. The factor then pays the company in two instalments; a lump-sum advance and a rebate. It essentially secures your cash flow with difficult clients and helps you gain more working capital so you’re less likely to stall your services due to a lack of real income.
Could you create recurring income as part of your pricing structure?
Depending on the types of services you offer, you may be able to create a pricing option that allows for predictable recurring income. For example, you could have a contract with a company to provide maintenance services for them after helping them with something like a network installation. This will provide you with a steady source of income much like a salary.
Recurring revenue models like this can be popular for freelancers, but it requires you to offer a specific kind of service before you can take advantage of it. For instance, a copywriter likely won’t have a way to create a recurring revenue model since clients typically like to pay per job you complete. As such, this is something that you’ll need to experiment with and also advertise to your existing clients. The goal is to provide excellent value for money when it comes to work completed, or to offer your clients peace of mind and follow-up services for something you’ve helped them install or add to their business.
As you can see, it’s not impossible to stabilize your cash flow as a new freelancer but it can be surprisingly difficult if you’re not prepared. Ultimately, it’s all about paying closer attention to the people you work with and seeing how reliable they are. When you grow your freelancing business, you’ll find that it’s beneficial to dedicate your limited time and resources to clients that meet invoicing deadlines and actually bother to pay on time. This allows you to secure a steady flow of income and gives you a much better chance of growing your freelancing career.
