Cash flow is the timing of money moving into and out of your business. You can be profitable on paper but broke in reality if cash flow is negative. For freelancers, this is often the difference between thriving and constantly stressed.
Why Timing Matters
You have bills due today. Your client pays in 30 days. That's a cash flow problem.
Example scenario:
- January: Complete $10,000 project
- February: Pay $3,000 in expenses
- March: Client finally pays invoice
- Problem: You need $3,000 in February but have $0
Common Cash Flow Problems for Freelancers
Long Payment Terms
Net 30 or Net 60 terms mean you're basically giving clients an interest-free loan. You've done the work, they have the value, but you're waiting for money.
Irregular Income
Freelancing means some months are feast, others are famine. Without planning, you overspend in good months and panic in slow ones.
Upfront Expenses
Taking on projects that require software licenses, contractor payments, or other costs before you're paid creates cash flow gaps.
Late-Paying Clients
Even with Net 30 terms, some clients pay in 45-60 days. Each late payment compounds your cash flow stress.
Improving Cash Flow
Require deposits - 50% upfront on new projects eliminates most cash flow issues.
Shorten payment terms - Net 15 or even Net 7 for small invoices. Due upon receipt for retainers.
Invoice immediately - Don't wait until the end of the month. Finish work Monday, invoice Tuesday.
Follow up on late payments - Automated reminders keep invoices from being forgotten.
Build a buffer - Keep 2-3 months of expenses in your business account.
Cash Flow vs. Profitability
You can be profitable but cash-poor (lots of unpaid invoices). You can also be cash-rich but unprofitable (you spent everything already). Both metrics matter.
Chronobill helps manage cash flow by tracking invoice status, automating payment reminders, and showing you exactly how much outstanding revenue you're waiting on.