Tuesday, June 15, 2010

What I learned about improving cash flow - 9 tips for freelancers

Tonight was the first time I attended the monthly meetings held by "Park City Women's Business Network". These are fun social events with a learning twist. Most of all, I enjoyed the networking with other business women in Park City. Tonight's speaker talked about improving your cash flow. The audience was very diverse and many also had business facilities and employees, but a lot of the tips were also useful for freelancers in general and me in particular with home based translation business.

Here are some of the tips I found useful for freelancers:

1. Improve profits by analyzing return on investment by customer and product line. I can very easily see from past result reports who are my most profitable customers and also which business activities that generate the most money (translation in my case).

2. Maintain customer loyalty (we all know this one, but it can never be repeated too much). Fix the problems, do something extra, follow up and ask for repeat business.

3. Sales and marketing - spend money to make money, but spend it wisely. Luckily we freelance translators have many low cost alternatives through Internet and social media.

4. Have the right tools available for your business - accounting tools, translation tools, project management tools

5. Implement a quality improvement program

6. Facilities - downsize, renegotiate lease terms or work from home. Insulate roof, attic, weather-strip doors, energy-efficient lighting, auto shutoff, check out tax credits.

7. Recycle and reuse - print on both sides of paper, buy reusable water bottles

8. Accounts receivable - be sure to put payment terms on your invoices and have a clear collection policy. Follow up with customer via phone and mail consistently and persistently. Consider requiring down payments of some portion for new customers.

9. Forecast cash flow and plan for future, retirement, have an exit plan

I also left the meeting feeling grateful that I work in a business where the level of financial investment is low and gladly skipped all tips about loans and financing. Now off to do some more translation work and improve my cash flow.

7 comments:

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  2. I just learned about this book for freelancers yesterday, which I plan to check out of the local library: http://thewealthyfreelancer.com/2010/06/a-highly-effective-money-management-system-for-freelancers-and-solo-professionals/ It sounds like it was written for us freelance translators. You might want to check it out! I plan to review it on my blog.

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  3. Thanks Jill! Did you mean this one that I reviewed: http://swedishtranslationservices.blogspot.com/2010/04/how-to-be-wealthy-freelancer-book.html, or is this another one with a similar name?

    ReplyDelete
  4. Here there are nine tips of freelancers listed. Today Blogging with Swedish Translation Services is important for every one.

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  5. Hi Tess,

    Thanks for mentioning this type of event, which sounds useful (and enjoyable at the same time). The subject of cash flow is a never-ending story for many freelancers, I guess, including me. (I've been running my own small translation and editing agency here in South Germany since 2005.)

    Regarding item 8 on your list, don't forget that payment terms are only valid if your (corporate) customers agree to them - the terms may need to be negotiated if you want to be paid within a fortnight of receipt, but your client generally settles invoices within a 6- or 8-week period. That means picking up the phone or even visiting the customer and talking with them. You may need to take the same approach if payment is overdue, too - a phone call can work wonders, whereas an e-mail reminder is likely to be less effective.

    In my experience, one of the most important things for translators to do to keep up their cash flow - however obvious it might sound - is to keep issuing bills; if there's a two- or three-week gap between your last two bills, you're probably going to feel it ...

    Do you have any practical experience of asking customers for down payments on large projects? I'm just making a quote for translating a book and have been wondering what terms it would be reasonable to propose, particularly as the customer is a new one. Any ideas about charging for a project set to last several months?

    Regards

    Carl

    Amper Translation Service
    Carl Carter
    Bahnhofstr. 2
    82256 Fuerstenfeldbruck
    Germany

    www.ampertrans.de/

    Member of the BDÜ translators' association

    =================

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  6. Hello Carl,

    Sorry for the late response. For large projects you need a contract and if it is a new, client, they usually accept that you need a percentage in down payment. For large projects, I usually agree on delivery in segments, for example once a month, one chapter at a time or such.

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  7. Hi Tess,

    Thanks for getting back to me. What sort of contract is necessary, I wonder? I presume our translators' associations will have drafts we freelancers can use as a basis - I'll contact mine - the BDÜ - and see what they say. My terms & conditions will be a good starting point, I'm sure.

    Regards

    Carl

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