The freelance word was derived from two separate words, i.e., free and lance, indicating independent workers. Being a freelancer, you work with freedom, such as which projects you will work on, who will be your clients, how many projects you will work on every month or every day. After that, the payment cycle and cash flow management are also your responsibility. One of the most common issues businesses face is cash flow management. According to research, around 57% of freelancers have faced cash flow problems. Also, experts say those who do not manage their cash flow with expert freelance invoice software face late payments and poor cash reserve resulting in a threat to their survival. Considering this, you need to do every possible thing to manage your cash flow.
Read on to get your cash flow management queries answered.
What are the best practices to set up payment with the client?
Working as a freelancer, you will have to look for every part of your business including the cost estimations. Setting up a systematic process will help you overcome multiple business process hurdles. If you are working outside the freelance marketplace (such as PeoplePerHour), you should formalize the contract by asking your clients to e-sign an agreement and debit mandate. Also, you can set up an account on freelance invoice software available in the market which will help you automate your pending payments and manage your projects.
How should you approach invoicing as a freelancer?
Being a fresher to a freelance job, you must be having difficulty in managing your clientele and pending projects. One of the significant doubts for freelancers is which approach is best for invoicing. Also, few freelancers have raised a query, “is invoicing necessary for freelancers?” The answer is a Yes if you are pursuing freelance as your sole earning source. Be it VAT registered or not, online invoicing software will help you manage your invoices and payments. Cloud-based software like Invoicera enables you to save all your client’s data in secured storage and helps to facilitate payments safely. Thus, you can manage all your clients in a single dashboard.
From where to start while trying to assess your market value?
A survey states that many people started freelancing as temporary gigs but slowly took freelancing for a long term. The number of freelancers grew from 18.5 million to 28.5 million since 2014, and 48% of the U.S. workforce will be 48% by 2020. Thus, choosing a freelance job can be a good choice. But, starting as a beginner, you must be unaware of what is your market value. For this, you first need to research and create a cv. Contact some people who are in similar roles and see what they are charging. You will realize your current worth and be comfortable in charging accordingly. Try not to undermine the quality according to the rate you are quoting at an initial stage, and also, don’t compete on higher rates if you don’t have experience. Working step by step will help you grow.
Here are some freelance statistics you should definitely read:
- The total freelance contribution to the American economy is about $ 1trillion or about 5% of total GDP.
- 48% of freelancers get paid at a fixed fee, 29% paid hourly, and 23% of the mix.
- 60% of freelancers claim the freelancing has given more money than their previous job.
- A skilled freelancer’s hourly wage is $28.
What are 5 cash flow management tips for freelancers?
If you are a freelancer, you should know cash flow management apart from your subject’s skills. Here are five essential cash flow management tips you need to check out:
Accurately record all income & expenditure
It’s important to have a track of your total income and expenditure every year. These records help you in paying your taxes on time, gain explicit knowledge of how much you earned, and what and where your expenses were significant. These five essential tips may seem fundamental but are a very wise step for maintaining your cash flow. Later, you will have strong knowledge about your expenses; thus, managing your cash flow accordingly.
Analyze data frequently
Start with analyzing weekly and then begin with a broader evaluation of collected data every quarter. You can dig deep to know where your expenditure goes into vain and where you are not making enough money. You need to have a clear picture of expenses on subscriptions, tools, or programs that generally people forget. You can manage costs and income easily with online invoice software where you can set up recurring bills automatically, track your dues and save your client’s invoice date on a secured cloud network. In this stage, you can also use excel alternatives to further optimize your financial tracking and analysis processes.
Establish sensible payment terms
Building practical payment terms helps you get paid on time. Terms can include advance payment before you start with your client project and half of the remaining payment after completing the project. In your invoice, you must include your terms and conditions stating your payment cycle, i.e., set a number of days for the payment after the invoice has been sent. This helps you maintain a systematic payment cycle, thus facilitating timely payments. With the help of subscription billing software, you can create a professional invoice, including all details automatically.
Send invoices early
When it comes to invoicing, you should never delay. Sending late invoices will slow down your payments. Therefore, the faster you send the invoice, the faster you receive payment. There is invoicing app for Android Phone that can help you manage the invoices and send them on time to your clients.
Simplify payment processes
Provide a more accessible platform to your clients. An easier payment platform will allow your clients to make instant payments instead of confirming where to make payment. You can also check out some auto invoicing software that has integrated payment gateways allowing your client to pay across the globe.
What should you do during a period of low income?
It is advised to follow a three-month rule. You must set aside the three-month savings that will allow you to pay bills for three months (even if you have negligible income for these three months). You can evaluate your expenses and check how you can save costs. Eliminate extra expenses like entertainment subscriptions, high-priced tools, etc.
Can you suggest a cash flow management resource?
Many freelancers get confused amongst multiple cash flow management software in the market. So, here we have come up with a feasible choice, i.e., Invoicera, the best invoice app for iOS, which is best for people starting their career as freelancers. It helps you optimize your multiple financial activities like online invoicing, online payment, client management, and many others. Also, it has 30 payment gateways like PayPal, Pay gate, etc, integrated. You can manage all your client on a single dashboard, and the data will be secured as it is saved on the cloud. Seek a demo from experts to know better.
FAQ’s
Which is the best freelance online invoice software?
Invoicera software can be a suitable choice for freelancers.
What are the five essential tips for freelancers to manage their cash flow?
Here are 5 points freelancers need to follow for managing cash flow:
- Accurately record all income & expenditure
- Analyze data frequently
- Establish sensible payment terms
- Send invoices early
- Simplify payment processes
How to approach invoicing as a freelancer?
If you choose to freelance as your sole source of earning, try to use online invoicing software, which has a systematic platform for managing your invoicing, online payment methods, saved data, and much more.
