Cashflow is the lifeblood of any business and is also ultimately the measure of your success as a business. It can be the end of your business if you are unable to maintain a healthy flow when you have bills and a mortgage/rent to pay that could force you back to the security of employment. You need to have an attitude that you have provided a quality service and that you are entitled to payment for your services since payment may not always be prompt. We have our top tips here for maintaining a healthy cashflow:
1. Half payment at outset of project
Generally this is a great practice since what can appear to be a simple project at the outset can easily become protracted meaning you don’t receive payment for months that could be sorely needed to keep paying the overheads. You may choose not do this on occasions when you are attempting to build a relationship with a fellow creative.
2. Send invoices promptly
Ensure that you send the invoice as soon as you can at the end of the project since your client isn’t likely to ask for the bill and sending promptly will speed up payment.
3. Have a contract
Make sure you have a contract for every job you take on to ensure that you have recourse should payment not be forthcoming. There is nothing worse that not being paid and realising you have agreed the terms of payment for your project by phone. In your terms and conditions you can consider including terms for interest payment that will accrue where payment is late for further protection.
4. Background check on clients
If you are working with someone unfamiliar (which is often the case) it is worth doing some research on your potential client to find out what they are doing from a standpoint as to whether they are likely to pay. It can be very difficult to assess this sometimes and there will always be an element of risk with working with anyone unknown, such is the risk of having a business! Checking places such as their social media and website is a way of gauging someone is who they put themselves out to be.
5. Make sure you schedule for chasing
By setting a schedule for getting in touch with clients for payment you will ensure that you keep on top of chasing for your outstanding debts. Not only will this hopefully facilitate the prompt payment of your outstanding money but may also play an important role later if proceedings become necessary as you can show a Judge that you made every attempt to resolve the issue without commencing legal proceedings that may help to achieve a favourable decision.
6. Ensure you have legal expenses insurance
If communication breaks down and it becomes clear that they do not intend to pay you for the work you have done then you should take legal advice. Making sure you are insured for legal expenses will avoid having to splash out for expensive legal fees that would otherwise be unaffordable. You could consider sending an initial letter to your client advising them of your intention to issue legal proceedings that may prompt them to issue payment as a last resort before commencing legal proceedings to recover your money. Legal proceedings are incredibly time consuming so should really only be considered when all other options have been exhausted.
These are our 6 tips for maintaining a healthy cashflow but we would love to hear from other freelancers on any other tips that you may employ to keep consistent cashflow.