Tips to Better Manage Your Solo Business Cash Flow
Practical strategies for business owners
Nothing strikes stress in a solo business quite like money. And the most frustrating part? You can be doing everything "right" and still feel stretched thin. You might be owed a ton of work, but because of payment terms (or late-paying clients), the money hasn't hit your bank account yet. Until it does, it doesn't pay your bills.
Cash flow is the movement of money in and out of your business. Lack of cash is often the real reason solopreneurs feel like they're in constant low-level panic, even if they have enough clients to support their business.
Controlling cash in your business is often the difference between operating in survival mode and financial stability.
Cash is the cause of stress
You have contracts signed and projects underway... but if payment hasn't cleared yet, you're panicking. In the meantime, rent is due, monthly subscriptions hit your credit card, and you need to buy groceries.
One of my most stressful situations as a freelance writer was when a client owed me more than $3,000. My emails were ignored. I had other work in progress and paused everything, saying, "I won't resume work until you pay me." That didn't motivate the client to pay. Finally, after almost three weeks, the client sent payment. I got an excuse that the accounts payable team had mixed something up.
I've also had situations where client work stalls. I'll sign a contract for 10 deliverables, with payments due at different stages. Then the project is delayed, therefore I can't invoice for the project.
Many situations aren't within your control, but they still affect how you get paid. You might see advice to "Just invoice for 100% upfront!" but that doesn't work for every type of solo business.
Not having enough work or clients is one type of stress. A mismatch between what you’ve earned and the money you actually have is another. It's how so many solo business owners end up feeling like they’re one late payment away from disaster, even when their business is “doing well” on paper.
Moving past survival mode
The moment you get proactive about cash flow is when you'll create stability in your business.
When you're low on cash, you're in survival mode. Survival mode forces you to make short-term decisions. You might say yes to low-paying work, take on clients you don’t want, or hesitate to invest in tools that would actually save you time. When cash is tight, every decision feels reactive.
Even if your cash flow feels "mostly fine," you also have to prepare for a larger market shift, such as a recession or some type of major disruption.
But when you manage your cash intentionally, the dynamic of your business shifts. You're no longer depending on every payment to clear on time. You're not waiting for one client to pay so you can cover next week's expenses. You'll have some breathing room to actually think strategically instead of scrambling.
3 Tips to manage your cash
Not sure how to control your cash? Here are some tips to get started.
1. Invoice clients on the same day every month
For a long time, I invoiced my clients based on when I completed work. So invoices went out on different days every month. My clients also have different payment terms, so some are due within 15 days and others are due within 30 days.
This system made it really hard for me to predict when cash would arrive. Some clients paid me within a few days of receiving an invoice, while others would pay me ON the due date. Meanwhile, my bills were due on the same days every month.
I changed my invoicing process. I send out invoices on two days per month: the 5th and the 20th. It created a predictable flow of cash. Whether clients were paying me Net 15 or Net 30, I would receive money around the same time I was sending out the next round of invoices. Instead of wondering when money would come in, I had a rhythm.
It also saved me time, since I was only preparing invoices twice a month instead of every few days.
2. Add money to a savings account
When you have extra cash in your bank account, move some to a business savings account. This becomes your buffer. If a client is late paying you or you have a slow month, you can pull money from your savings account rather than worrying about your cash flow.
Moving money into savings is part of my overall budget as a solopreneur. Instead of only adding "extra" money, I transfer money every month. But start by contributing whatever you can. I promise it will reduce your stress at some point. Because now you're not as dependent on clients paying on time.
One of my clients had a hiccup with a rather large payment. I transferred money for the amount of the invoice from my emergency savings into my checking account to cover the gap in my cash flow. As soon as the client paid me, I moved the money back to savings.
If you choose a bank for freelancers or solopreneurs, you'll often find features that make it easy to automate savings.
3. Pay yourself a fixed amount
One of the biggest traps solopreneurs fall into is the “feast or famine” cycle with their own paycheck. Not only do you have to worry about your business expenses, but you're also dependent on clients to pay your own bills.
Instead, pay yourself fixed amounts on a fixed schedule. Transfer the money from your business bank account to a personal bank account. I pay myself on the 15th and last day of every month.
I've also given myself "raises" over the years. As I earn more, I pay myself more — but it's always a fixed amount. I don't scale back how much I pay myself during lean months, because that would make my personal life's finances unpredictable. Instead, I rely on my business savings account if I have a slow month.
Anna Burgess Yang
If your income stops, you’ll be ready
At some point, you'll lose a client or have a slower month of revenue. (Or maybe you break up with clients.) As solopreneurs, we expect that.
But you've also got to consider bigger disruptions to your cash flow. I had a medical crisis this year and wasn't able to work for two months. Zero income from clients during that time. I floated myself with cash from my savings, putting enough money into my business checking account so my business expenses could be paid.
The more cash you have on hand, the more options you'll have. You won't be thrown into chaos when something unexpected happens.
If you need to step away from your business, this free guide walks you through everything you need to do to prepare.
