Cash Flow – From a Gusher to a Trickle

Freelance grant writing can be financially challenge or rewarding, it’s never in the middle.  It’s never like that government job you’ve left, or that you may want to leave.  The paycheck isn’t automatically deposited to your account on the first and the fifteenth of the month with all of the taxes, retirement, and government fees taken out.

Feast or famine is what your income will look like.  Sometimes the feast is more of a snack but hey we take what comes our way and we eat heartily. Cash flow influences how you pay bills and what you can afford.  There have been times when I must get creative about how I get things done and other times when I have failed to rein in a spending spree set loose by a fat check.

Here are some things to get organized in your head before you get into cash flow droughts.

  1. Establish your contracts to pay you some now and some later.  If you’re working on a research project, then establish a monthly payment schedule.
  2. Set up a tax account where you can put a healthy percentage of each check where it can earn a little interest and save you from being short when your quarterly taxes are due.
  3. Pay off credit cards, as much as you can afford. I’ve found that I tended to live on those at times and so long as my work paid off later, I could pay them down quickly when the tide came in.
  4. Maintain your vehicle.
  5. Pay the entire year of vehicle insurance at once so you take that out of the cash flow equation for 12 months.  You also save money on fees they charge for spreading it out.
  6. If you have an evaluation project, spread the payments out over the year so it helps your cash flow.  You may want 50% up front, then 24% in January, 25% in June.  Or, you may want to have the 50% come in March before taxes are due.
  7. Build things into your contracts where you can that provide you with materials or services you need to do the work.
  8. Build up a cash reserve by setting aside a pittance.  Easier said than done, I know from experience!  I also know that if you get used to setting aside a pittance, it’s easier to add to that as you get into the habit and as extra money comes in.

Cash flow is one of the biggest challenges facing a freelance grant writer or any business person for that matter.  It’s tricky and agencies may be slow in paying, slow in approving contracts, and paperwork gets lost.  You must do your part to ensure that the wheels of each bureaucracy grind as smoothly as possible by submitting invoices promptly, accurately, and to the right person.  Make friends with the people in accounting because when a payment is slow, and your cash flow is low, there are no better people to know!

Positive cash flow, now that’s sexy!