A quick guide to cashflow for freelancers

Why is cash flow more difficult to manage for small businesses/freelancers than larger businesses?

In general, it’s easier to ignore smaller businesses, in comparison to larger firms. In particular, if you’re a freelancer working for a large company, the balance of influence is going to be very unequal, and hugely weighted against the freelancer. The problem is, when up against large firms with tons of experience, the freelancer is often going to pull the short straw. With more experience, as time goes on, freelancers and SME’s will learn how to manage their cash flow better year on year. 

Larger businesses also often have dedicated departments or employees whose sole responsibility is to manage cash flow. These departments or individuals are in charge of ensuring there is always cash coming in and going out on their terms. When looking at smaller firms, or freelancers, this is rarely the case. When starting up, many freelancers don’t have the knowledge or experience to manage their own invoices at all. 

When it comes to products and services, freelancers and small businesses generally receive a lot less help. Banks and ‘traditional’ financing providers won’t often help the SME’s as they are seen as too risky, especially in comparison to the bigger, well-established companies.  

So, taking all of the above into consideration. Everything is weighted against the freelancers, putting them on the back foot from the start.

Important things to consider as a small business owner:

  • Understand the value of your time – making sure that you understand the value of your own time, and not under-pricing yourself is key! Looking at your costs, effort, and time will help ensure you don’t fall short in the future. 
  • Understand your profit margins – following from the above, you need to be able to understand your profit margin. You need to be aware of how much money you can keep once you have paid your outgoings. This is also extremely important when pricing yourself and/or your services. The classic phrase goes, ‘profit equals sanity, turnover equals vanity’. By ensuring you have profit coming in regularly, your cash flow should stay healthy. 
  • Invoice on time – if you’re expecting clients to pay for your services on time, ensure that you are invoicing on time. Give your clients plenty of notice to pay. 
  • Be clear on your terms – ensure that your clients know exactly what your contract and payment terms are, this will stop any miscommunications down the line! If you haven’t been clear on your terms before starting work, you could end up issuing refunds, or having unhappy clients. 
  • Time management – don’t overpromise. Only agree to work you can afford to deliver at the demand price. If you’re working beyond your time scale, you’ll soon start falling behind and things will very quickly start falling out of place. 

What not to do as a freelancer/small business owner:

  • Keep making the same mistakes – like anything in life, experience comes from making mistakes. You’re never going to be a pro right away, and that’s okay. Leaving yourself some time and money to make mistakes will also help! When something does happen, assess the situation to stop it happening again. 
  • Exceeding your boundaries – if something is painful for your and your business, stop doing it. Your mental health is important, so don’t push yourself more than you are capable of. 
  • Believe – don’t think that being optimistic will keep your cash flow in order. You need to be strong-willed and stand your ground. Of course, being optimistic is always helpful, but be realistic and remember that hope isn’t a business strategy. 


When it comes to T’s&C’s, make sure that they are fair, but most importantly, that they work for you. Also, it’s common practise to just use a template for this, but it’s no good if it’s completely different to what you agree to. 

Lastly, manage your money, don’t let your money manage you! Manage your cash flow according to what you need, and want to do! Plan your business terms and conditions according to your need. 

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