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The Freelancer’s Guide to Cash Flow Management

Neil KokemullerNeil Kokemuller
April 30, 2018

We recently discussed the importance of positive cash flow when operating a freelance business. However, cash-flow management is a challenge for freelancers focused on delivering quality goods and services to customers.

freelancing-cash flow

The following is a basic overview of effective cash-flow management, including guidance for freelancers that want to manage their cash flow wisely.

Cash Flow Management Basics

Cash flow is the relationship between the money coming into your business and the money going out of it. It is distinct from profit, in that accounting-based profit does not always accurately reflect your financial viability. Cash-flow management involves specific strategies and techniques used to optimize the inflow of cash and minimize the outflow of cash.

Strategies for Effective Cash Flow Management

Here are some of the most effective tips for managing cash flow in your freelance business.

Diverse Clients: Big clients may seem like a dream to a freelancer. One big client can provide a steady flow of work and income. However, larger clients are often less predictable and have more deliberate payment processes. A diverse client roster, including some smaller, project-based work, is usually a better insulation against the risks of putting your faith in concentrated clients.

Prompt Payment Terms: There are a few specific steps to help improve the positive inflow of cash. Aggressive payment terms, such as upfront payment or short payment periods of 15 days or less, ensure you receive money promptly after providing services. If you give a company 30 days to pay, it will typically use that time as part of managing cash flow for its own business. Do not let late payments fester; communicate consistently and do not complete additional work without receiving money.

A Budget: It is hard to take cash-flow management seriously if you do not keep a budget. A budget gives you visibility into your anticipated revenue and expenses for a period of time. If the revenue-expense relationship is unfavorable, efforts to earn more business and reduce expenses contribute to improving your cash flow.

Proper Loan Usage: On the cash outflow side, minimizing expenses to the extent possible is a great place to start with cash flow management. You can also look for opportunities to borrow money at a low rate with favorable repayment terms. With low-interest rates, the costs of borrowing money become advantageous as you can hold on to your cash longer.

Payment Service for Management: You are not alone in the world of cash flow management. There are service providers, like Payoneer, available to help you collect payments on-time, maintain revenue and expense records, communicate with clients, and make predictions. All of these features help you receive payments quickly and have visibility for your cash flow into the future. These efficiencies enable you to focus on attracting new clients and producing quality work.


The ability to manage cash flow is critical to freelancers that want sustained success. Follow these basic strategies for optimizing cash flow management to build a business that is viable and thriving for a long time to come!

The content provided in this article including any information relating to pricing, fees, and other charges is accurate and valid only as of the date it was published. In addition, changes in applicable regulations, policies, market conditions, or other relevant factors may impact the accuracy of the mentioned pricing and fees and other associated details. Accordingly, it is further clarified that any information regarding pricing, fees and other charges is subject to changes, and it is your responsibility to ensure you are viewing the most up to date content applicable to you. Payoneer will provide the most up to date and accurate information relating to pricing and fees as part of the account registration process. Registered customers can view this information via their online account.

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