Timeless advice on cash flow management for freelancers.

Posted on 03 Jan 2022 09:09 in Small Business Hacks
by Zainab Sohangpurwala

Managing cash flow efficiently can make a freelancer do many things with limited income. Want to know how to effectively manage your income? Read along for some tips.


Managing cash flow is crucial for all freelancers to maintain economic independence. Balancing income and expenditure are the key to remaining economically stable.


Some of the issues that freelancers face when it comes to managing their cash flow are as follows:

  • No fixed income – salaried employees have a fixed income, but as a freelancer, your income will vary according to the projects you get. Some months your clients may give you a big project and pay you in advance, and others, you might get smaller projects with lesser pay. It is challenging to manage cash flow when income is not stable. 

    Some clients do not give advance or even make payments on time. This makes it difficult for freelancers to estimate a monthly income.
  • Fixed expenditure – even though income varies, expenditures are fixed and keep increasing. Freelancers who do not stay with their families have an extra household expenditure apart from other day-to-day expenses. As income is not stable, it gets difficult to pay the bills. Sometimes expenditure exceeds income.
  • There is no proper way to budget – budgeting is the key to managing cash flow. As freelancers do not have the right software to analyze their income, it gets difficult to budget.


If you are a freelancer and struggle with the same issues no need to worry. Here are some ways in which you can manage your cash flow efficiently.


1. List out your monthly expenditure 
Expenditures are of 2 types, first is the fixed spending on things like electricity bill, rent, transport, grocery, etc. and second is the personal spendings on things like clothes, outings, etc.

List out all your fixed expenditure to understand how much you need to earn to survive. Secondly, write down all the personal expenses and reduce that to a minimum. Personal expenditure is the only place you can make cuts if you fall short of money.


2. Manage your source of income 
If you are a freelance writer, service provider, or social media manager, try to get into long-term deals with your clients. This way, you will have few assured income sources. Optimize them, make sure the contract gets renewed with good service. 

Never get stagnated or limited to a few clients. Try and expand your services to as many as possible.


3. Send clients invoices for payments
Documenting the charges for your services via an invoice is crucial to avoid frauds, misunderstandings, and delayed payments. With a proper invoicing system such as Shimbi Invoice, you can save lots of time, money, and energy.

You can document all your invoices in one place, and the software will calculate your total income. It can segregate and show how much you have earned from each client, who has paid and who hasn't.

You can also document and create receipts for all the payments you have received. This way, you have a hold of all your income.

You can also send reminders to all the defaulters for their payment. You don't miss any payment. Getting payment on time is key to maintaining healthy cash flow. 


4. Invest
Investing your money is a great option to keep your cash flowing and save tax. You can invest in any scheme, stock market, fixed deposit, gold, property, cryptocurrency, and so much more. Investing has become so easy today as you can do it with a few clicks from your phone.

Investing made accessible via mobile apps

Before investing, do read the terms and conditions carefully. If it's a risky investment, avoid it as it may incur losses to you. These investments act as a saving for the future. You can cash them out in the future when you need them.


5. Rent things instead of buying
If you've just started your freelancing journey and are struggling with cash flow, then this tip will help you a lot. If you're a freelance photographer, rent the camera and other equipment you need rather than buying it.

Or else you can buy it in installments. This way, you will not have to take out a lot of money at once but small amounts for an extended period.

If you need a workshop, take one on rent rather than own it.


6. Accept payments via multiple platforms
In today's cashless world, you have to accept payments by both traditional and digital methods. That means getting only cash and bank deposits is not enough. You have to create accounts on mobile wallet apps such as GPay, PhonePe, Paytm, Mobiwik, etc. This was your clients can quickly transfer the payment to you.


7. Compare your income and expenditure with the previous month
Budgeting is essential for managing cash flow. You should compare your budget to the previous month's budget to evaluate if it is better or worse.


Managing money is very essential in today's life. Some people have little of it but have a wonderful life, while others have a lot of it but are unsatisfied. What you do with what you have will eventually determine your level of happiness.


Do you have any other ideas? Let us know in the comment section.



To help you manage your cash flow, Shimbi Invoice is there to help. Its user-friendly, efficient, and has a free version for as long as you want to use it. Once you grow and are satisfied with it, you can upgrade to the premium version.

Click here to know more=>



About the author

Zainab Sohangpurwala     
Passionate about helping companies grow their business via content marketing.

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