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Cash flow considerations for project-based freelancers

Tips to help smooth over cash flow inconsistencies as a project-based freelancer

Half of current freelancers cite issues with income stability as their top barrier to freelancing more. To help streamline your cash flow as a freelancer, consider these five tips.

Invest time in cash flow forecasting

Whether you use an Excel spreadsheet or cash flow software, forecasting is a good first step to managing cash flow. To make the most of forecasting, it can be helpful to sort your projects not by assignment date or due date, but by when you expect to be paid for them.

For instance, say you were assigned a project in June, completed it in August, and were paid upfront. In this case, that project would live in the “June” column of your spreadsheet. On the other hand, if you were assigned a project in June, completed it in August, and paid when the project launches (which perhaps for this client tends to be about two months later), the project would live in the “October” column of your spreadsheet.

Compare these income projections against your anticipated expenses to determine when you’ll have a solid income and when you may need to find more work. 

Be strategic with your payment schedule

To avoid payment problems with clients down the line, clarify payment terms before agreeing to take on a project. This includes considerations like when you will be paid (e.g., upfront, when you complete the project, when it goes live, or in installments) and how you will be paid (e.g., check, direct deposit, or electronic services).

It may be helpful to explore whether you can: 

  • Request upfront payment. Depending on the client, this may or may not be possible, but can be a beneficial approach if it is.
  • Ask for payments as project milestones are completed. This draws out the payment over time, rather than providing you with one lump sum at the end.

Invoice immediately

To facilitate the invoicing process upon completion of a project:

  • Have a template invoice already in place.
  • Keep solid project records, and make a habit of checking for any unpaid invoices on at least a weekly basis.
  • Consistently follow up on unpaid projects. It’s OK to ask clients for payment that you are due. 


Every time your receive income, consider making a transfer to your emergency fund, or earmarking funds for future tax payments and other needs.

Familiarize yourself with your expenses

As you’re organizing your income, it’s equally essential to organize expenses – both personal expenses, and expenses associated with your business.

Identify which expenses are fixed and which are variable. Fixed expenses may include non-negotiable items like rent, a car payment, or your phone bill. Variable expenses are often less predictable, and can increase or decrease from month to month. Keep detailed records of all these expenses so you can analyze where you can afford to cut spending in leaner months – and what expenses to get a jump on in more lucrative months.

Don’t forget to include the expenses associated with your freelance work. You may have a monthly bill for a co-working space, gas for your car, or equipment and supplies. Consider how these funds may shift as your business grows, as taking on more work may mean you need to purchase supplies or fill up the tank more frequently.

Prioritize savings

Setting up an automatic deduction plan can make it easier to ensure you save a portion of each paycheck. Profitable months are a good opportunity to dedicate additional earnings to savings, paying down debt, or other causes that will improve your financial health, rather than using funds for additional discretionary spending.

Wells Fargo recommends aiming to designate 5 to 10 percent of your income toward savings. As your income increases, you’ll be able to increase the savings rate as well.

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