After a recent surge and upturn in fortunes, the UK economy has taken a sudden turn for the worse. Industrial and manufacturing output dropped by 0.9% and 1.2% respectively during the four weeks of January, while the projected outlook is also uncertain now that the government has finally triggered Article 50.
This can make it more challenging for freelancers and business owners to optimize their profitability in the current climate, with customers and service providers likely to create an increasingly risk-averse approach. This means that you will need to adopt proactive steps to maximizing your cash flow, ensuring that you make the most of your earning potential during each billing period.
Create a Model That Optimises Monthly Cash Flow
On the subject of cash flow, one of the key issues facing businesses is the reluctance of clients to make prompt payments. Similarly, some will negotiate 90-day payment terms in line with their own business model, and while you may agree to these in order to secure the work they can have a decidedly detrimental impact on your cash flow. You should, therefore, consider the creative approach of leveraging invoice services, which enable you to sell invoices and accounts receivable before repaying creditors when your clients settle their bill.
This provides an instant injection of cash into your business, while it also negates the need to chase debtors and spend your time organizing your company finances.
There are other steps that you can take too, such as regulating your own payments terms with a view to optimizing monthly cash flow levels. The best way to achieve this is to enforce 30-day payment terms wherever possible, particularly for smaller sums that should be easier to pay. By presenting these terms to clients from the outset you are optimizing your chances of being paid quicker while creating a sustainable business model that can drive higher levels of cash flow throughout the financial year.
How Else Can You Optimise Your Cash-flow as an Entrepreneur or Freelancer?
On a final note, it is important to understand the role that pricing plays in optimizing your cash flow. By setting price points that are competitive and reflective of the quality of your work that you deliver, you can enhance your value proposition and incentivize clients to make prompter payments over time.
These steps will help you to maximize your cash flow as a freelancer or entrepreneur, which is more important than ever in the current economy. It is particularly important for those who are just starting out, as it enables to focus on refining the quality of your products or services rather than constantly chasing clients for payments.