How to Improve your Cash Flow as a Freelancer: 5 Basic Strategies


How to Improve your Cash Flow as a Freelancer: 5 Basic Strategies


How to Improve your Cash Flow as a Freelancer: 5 Basic Strategies: Let's talk about something that can make a big difference in your freelance career: managing and improving your cash flow as a gig worker. If you are working as a freelancer in Nigeria, you may have noticed that opportunities have increased recently. 

However, this flexibility comes with the challenge of maintaining a steady income. Delayed payments, inconsistent performance, and unexpected expenses can complicate matters.

First, why is cash flow management so important for freelancers like you? Please think about it. you are the boss You can select projects, clients, and working hours. It's cool? But this also means that you are responsible for when and how much you pay. And let's be honest, things don't always go smoothly. You need to learn how to improve your cash flow.

In fact, according to a World Bank report, Nigeria, like Kenya and South Africa, has about 17.5 million online freelancers, and online gigs in sub-Saharan African countries account for 80.6% of the flow of internet traffic to his platform. 

Freelance jobs are also incredibly diverse, from technical and creative work to sales, marketing, and business. But don't worry. There are smart strategies you can use to improve your cash games.

 

Why Cash Flow Management is Important for Freelancers

As mentioned earlier, freelancing usually involves independence in choosing projects, clients, and schedules.

However, this also means that you are responsible for the timing and amount of your payments. For example, research shows that more than half (57%) of freelancer’s face cash flow issues that threaten their overall survival, primarily due to late payments and lack of reserves.

Beyond the nature of self-employment itself, cash flow management is especially important given the current economic climate. For example, Nigeria's latest development report shows rising inflation. With inflation at its highest level in 18 years, the poverty rate rose from 40% in 2018 to 46% in 2023. 

Due to these pressures, inflationary policies also raise the cost of living and reduce consumer demand. As the government works to bring inflation back to manageable levels, self-employed people like you can take the initiative and use the following tips to make ends meet and improve your cash flow.

These strategies range from basic business processes such as budgeting and invoicing to alternative funding sources such as investments and loans.

 

Tips and Strategies to Improve your Cash Flow as a Freelancer

How to Improve your Cash Flow as a Freelancer: 5 Basic Strategies


1. Take Budgeting Seriously

Budgeting can get a bad rap as a time-consuming process, but it shouldn't be ignored if you want to cover your expenses while saving for the future. A good starting point for a monthly freelance budget is the 50/30/20 formula. This recommends allocating 50% of her income to basic living expenses such as rent, groceries, and bills. 30% for needs such as entertainment and luxury goods. 20% is applied to reserves or debt payments.

Another way to take budgeting seriously is to keep accurate records of your income and expenses. With this in mind, you can use a budgeting app or spreadsheet to regularly track your cash flow and identify any discrepancies in how you make and spend your money.

 

2. Apply for a Business Line of Credit

No matter how carefully you budget, cash flow can still be tight. In this case, consider applying for a business line of credit to act as a safety net. Compared to traditional bank loans, which come with strict payment requirements and terms, business lines of credit are more affordable because you can apply online and find a financial institution where you can receive funds instantly. 

Business lines of credit are also useful for freelancers because they allow you to use the funds for any purpose, such as paying bills or buying new equipment, only when you need them.

 

3. Treat Online Transactions as Passive Income

In addition to opening a line of credit, you can also improve your cash flow through other sources of income. This is especially useful when employment opportunities are scarce. Online trading has become widely available in Nigeria to earn passive income, with the advent of platforms with profitable and easy-to-use features, whether you are a beginner or experienced in financial instruments trading.

Whether you're planning to buy or sell stocks, indices or foreign currencies, make sure the online trading platform of your choice gives you access to the world's largest financial market. We also offer tiered accounts that fit your trading strategy and offer better-than-market conditions, including low initial costs and stable spreads.

 

4. Optimize Payment Channels

A common reason why most freelancers struggle to control their cash flow is because clients don't pay on time.

While paying attention to the payment terms of your contract, you can also optimize your payment channels to make it easy for your customers to pay anytime, anywhere. 

According to Nigerian freelancers interviewed by TechPoint Africa, popular payment platforms that offer instant payments and processing include Payoneer, which allows transfers to local accounts, and gives freelancers a competitive advantage over virtual bank accounts abroad. These include Geegpay, which offers certain rates and allows companies to better work with overseas customers. To further increase the number of available payment methods, you can also receive payments via cryptocurrencies.

 

5. Use Online Invoicing Software

Finally, delivering invoices efficiently can help prevent late payments and missed payments. Instead of sticking with time-consuming manual processes, consider using Invoice NG, an online invoicing software that sends invoices and payment notifications to your customers so they can receive funds before the due date.

The paperwork associated with accounting and invoicing can also be expensive, but you can avoid paying for paper, envelopes, and postage by completing these business processes online. Using specialized software to send and track invoices also helps your overall financial organization, accessibility, and accuracy, since the calculations and file storage are handled programmatically instead of doing it yourself.

Managing cash flow isn't so easy when you're independently managing multiple projects and clients at the same time. However, by investing time and effort into financial processes like invoicing, you can solve your cash flow problems and get one step closer to financial freedom and stability. To learn more about Invoicing NG's features and services, please explore the rest of the website.


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Final Thoughts

Controlling your cash flow is essential to a successful freelance career. By implementing these strategies and adopting his five basic strategies listed above, you will be one step closer to financial security on your self-employment journey.


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