An unpredictable cash flow is often one of the biggest barriers to a happy freelance life. There’s nothing worse than worrying about how you’re going to pay the bills or chasing overdue invoices.

If this strikes a chord, here are seven cash flow killers that might be adding stress to your life right now as well as my own hints and tips about how to avoid them.

Cash flow killer #1: You don’t know your numbers

If I asked you right now, how confident would you be to answer the following questions?

  • How much money do you need to earn per day/week/month/year to cover your expenses?
  • How much money do you owe at the moment?
  • What money is owed to you and when is it due by?
  • Which have been your most profitable training jobs and, on the flipside, which jobs have you done at a loss?

It may sound obvious but one of the most important things that you can do to begin to even out your cash flow is to get up close and personal with the numbers that shape your business.

If you have a clear understanding of how much you need to earn to cover your outgoings and have money left over for savings, leisure, etc., you’ll be better able to come up with a plan for earning that amount.

Cash flow killer #2: You’re overspending

It’s so, so easy to overspend when you’re running your own business, especially if you’re constantly lurching between feast and famine. After all, don’t you have to spend money to make money?

My advice is to take control of your overspending as soon as possible by:

  • Writing down every expenditure, no matter how big or small
  • Reviewing your expenses and working out what you could cut altogether or how you could reduce or consolidate your outgoings
  • Paying off any debts before you focus on saving (although it’s helpful to have a rainy day fund in case a lean month does happen)
  • Setting a realistic budget and writing down everything you spend to make sure you stay on track

 Cash flow killer #3: You’re counting on promises, not contracts

Until an order for training has been officially placed and a contract/agreement signed, I would always advise against including the fee in your predicted income. There aren’t any guarantees that things will go ahead as planned.

Having a signed contract is also a sensible precaution to ensure that everyone involved in a project is on the same page about the services you’ll be providing and how much/when you’ll be paid to deliver them.

Freelancers are sometimes asked to work for lower rates or to offer free taster sessions based on the promise of future work but I’m always wary about this. You can’t live on promises and should be paid for your expertise.

If you only spend money already earned, your cash flow should improve.

Cash flow killer #4: You’re not tracking your sales

It can be hard to keep on top of your accounts, both when you’re busy or even when things are slow and your motivation has gone AWOL.

Maintaining a healthy cash flow depends on you knowing what money is due and when, whether that’s full invoices, deposits or instalments for your services – whatever your arrangement with your clients.

I’d also recommend tracking where your sales and referrals come from. This can help you to identify your most profitable marketing or contacts and focus your energies on them.

Cash flow killer #5: You’re not on top of your invoices

Although we’d all like to think that invoicing is a top priority, sometimes life gets in the way. This might mean that you’re late sending out invoices or that you don’t have a clearly defined system for chasing late payments.

My advice is to provide your clients with your payment terms before you deliver your training and to send out your invoices according to these terms.

You might need to pop a reminder in your phone, on your calendar or even as a written checklist on your desk – whatever works for you.

Many freelancers find it helpful to send out reminders a week before an invoice is due, nudging clients to pay before they get hit with a late payment charge. Others offer a small discount (the original price of the job allows for this) to clients who pay the invoice within seven days.

Speaking of late payment charges, the Late Payment of Commercial Debt Regulations 2013 entitle businesses to add late payment charges and interest charges to any overdue invoices. You can read more about your rights at Pay on Time. If late payment fees are included in your payment terms, be sure to add them to your invoice from when your terms say they’ll apply.

Cash flow killer #6: You don’t know your annual peaks and troughs

Some businesses and industries are affected by seasonal issues or events in the calendar that can lead to peaks and troughs in bookings.

As a rule of thumb, what affects your clients could affect your training business.

Knowing this, I would suggest sitting down with your diary and looking for potential peaks and troughs before they happen.

  • Are your clients busier at Christmas or does everyone down tools?
  • Do your clients disappear over the summer?
  • Is your business impacted by things like the end of the tax year?
  • What have the trends been in your business over recent years? Is there always a quiet or super busy month? If so, what could be the reason for this?

Cash flow killer #7: You’re hanging on to the wrong clients

Most freelancers and business owners reach a point where they realise that they’re working with a client who is no longer a ‘good fit’. This can be because services have evolved, the businesses have changed direction or the client’s budget has changed.

If you have clients that always pay late, challenge your rates or move the goalposts on projects, now’s the time to review whether they’re still right for your business.

Although many of us feel that we shouldn’t or don’t have the right to end a client relationship, sometimes it’s the best thing you can do for your cash flow and your well-being.

Are you confident about your cash flow or do you feel like you’re living from feast to famine? What are your biggest cash flow challenges or how do you keep your cash flow on track? I’d love to hear your thoughts in the comments below.


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