Why You’re Starving: How to Avoid The Dark Side of Freelancing

Avoid the Dark Side of Freelance WritingWriters become freelancers for many reasons. Often, it’s the freedom to set our own schedule, a desire to be our own boss, wanting to earn more than a low-paid job offers, or maybe to be home with our young children.

Freelancing is a wonderful way to live and work, but few people tell you about the dark side — namely, struggling with the ups and downs of freelancer income.

Today’s post is a brief Q&A with Dianna Huff, author of Cash Flow for Freelancers. Dianna started out as a B2B freelance copywriter in 1998 and has since transitioned into marketing consulting. She wrote Cash Flow based on the strategies she taught herself to better manage her own variable income.

Carol Tice: Dianna, what do you mean by freelance cash flow? Also, explain how freelance income is different from earning a paycheck.

Dianna Huff: Cash flow is the inflow and outflow of money through your business. The inflow of money is the result of selling your freelance writing services. The outflow is the result of paying the expenses associated with selling your services: your website, hosting, phone, PayPal fees, insurance, equipment (e.g., your laptop or desktop), and taxes, to name a few things.

When you’re an employee for a company, you receive a paycheck on a regular basis. If you’re salaried, your paycheck is the same each pay period. Receiving a steady paycheck makes it easier to budget and pay your expenses.

All of this changes when you’re a freelancer. As a freelancer, your income is variable, both in terms of when cash arrives in the form of client payments and how much of it you earn each month. One month you can earn relatively high income, and the next month very low income. Adding to the variability is stuff that’s out of your control: projects that get delayed or cancelled, or a client who pays late.

Income variability is why cash flow is tough for freelancers. You have to juggle paying your business and your personal expenses against your up-and-down cash flow.

Tice: You hit on a point that not many freelancers understand — the time period between when you begin a project and when you receive final payment. Can you elaborate?

Huff: When I decided to figure out why I was struggling with my own cash flow, I analyzed all of my projects for the previous 12 months on the basis of when I received the initial deposit and when I was received final payment. That’s when I realized that this time period was 60, 90, even 120 days. A few projects had even taken six months! When I saw that, my reaction was, “O-M-G! No wonder I’m struggling.”

So, that’s one reason a freelancer may have cash flow struggles — the time period between getting a deposit and getting final payment can be very long. And the time period between invoicing for a project and getting paid for it can be long, too.

Tice: Besides saving more and doing more marketing, what else can we do to gain more control over our cash flow?

Huff: Get a handle on the outflow of cash — meaning, your expenses — in your business and your personal life. I used to have a number of cloud-based subscription services for my business. I bought all my books on iBooks or Amazon. I’d buy an app or three at the App Store. I ate out quite a bit, and on days when I was super-tired from work, I’d stop at the grocery store for wine and cheeses. I never really kept track of it all — because what’s $1.99 here, or $6.99 there, and wine and cheese I could “hide” in the grocery budget, right?

Well, all those outflows of money add up! Once I started looking at where my money was going, I got smart pretty fast. I cut cable. I cut the expensive cloud-based applications and looked for more cost-effective alternatives. I stopped buying books and now get them (and DVDs and audiobooks) from my library. I rarely buy alcohol now. I’m much more mindful of how and where I spend my money. First, being mindful means I don’t have to work so hard. And second, I spend money on what’s truly important to me — like my new bicycle. 🙂

Tice: What are some other reasons freelancers struggle with cash flow?

Huff: I think the main reason is we’re not taught how to deal with variable income. Until recently, most people worked full-time jobs, which is why financial advice is geared toward people who earn steady paychecks. For example, you hear constantly to save 10% of your income.

That’s great advice if you have a steady paycheck. But for freelancers, the advice really needs to be, “Create a cash cushion you can draw on during low-income months.” If you don’t have this cash cushion, you end up using credit cards to pay expenses. And that adds cost to your business.

Another reason is that we freelancers tend to focus on the work we have today, versus planting seeds (a/k/a marketing) that will bring in work tomorrow. We get busy, we neglect our marketing, and then wake up one day to realize we have two weeks of cash — and no work.

Part of smoothing out cash flow is understanding the very real connection between marketing, sales, and income. To go back to your first question, income doesn’t drop magically into your bank account the way it did when you worked a full-time job — you have to make it happen!

What has helped you smooth out your cash flow? Tell us in the comments below.

Dianna Huff is a marketing consultant based in New Hampshire. Her new guide is Cash Flow for Freelancers. (I’ve had a good look through it, and it has some GREAT stuff, including 5 exercises for analyzing your cash flow, and 6 strategies for creating a steady(er) income.) Get the first Cash Flow exercise free, right here.

Get the FREE E-BOOK: 100+ Freelance Writing Questions Answered!

48 comments on “Why You’re Starving: How to Avoid The Dark Side of Freelancing
  1. Jan Hill says:

    Great post! My greatest struggle is to keep marketing, ESPECIALLY when I’m busy. I recently heard from someone I sent an LOI to more than two-and-a-half years ago! She was a presenter on one of the Den events, and I sent her a pitch, then promptly moved on and forgot about it. But she saved it, and just contacted me about doing some writing for a custom pub. Gotta keep planting those seeds – you never know when they’ll sprout!

    • Carol Tice says:

      Thanks for sharing that, Jan — I hear from a lot of writers who get discouraged when they don’t get an immediate response. Just…keep marketing! It can take a while to play out, and to pay off.

  2. When I was more actively selling than I have been (I am now a full time newspaper/website reporter) I realized there is a big difference between publications that pay ON ACCEPTANCE and those that pay ON PUBLICATION. The latter are very unprofessional in my not so humble opinion.

    • Carol Tice says:

      Well…as someone who pays on publication, let me say that sometimes you need last-minute edits, and I need writers to respond to comments — that’s part of the contract for getting paid. I got burned paying on acceptance, and then having writers who never turned up on the comments.

      • Carrie says:

        How about splitting the payment – pay half upfront so the writer is motivated to start the work and the remainder when they complete it, including the comment follow up? I was also thinking about Dianna Huff’s comment regarding pay on long projects – how about requesting that clients pay on a monthly basis for a long project rather only at the beginning and end? I think that would help both the writer and client with budgeting and then both can ensure that the work is getting done consistently as planned. I am not currently a freelancer but I have worked many years with a variety of contracted elearning clients whom I set the expectation that pay is provided when certain tasks are completed (pay as you work). If any tasks are missing, there was a reduction in pay. This usually ensures that the client and/or writer both are equally committed to the successful completion of the project.

        • Carol Tice says:

          I only pay $75, so I don’t think milestone payments are appropriate here! But definitely they are on long projects — I like 30-50% up front, another 25% when I turn in a first draft, and the rest on finalization (or 14 days after I turn in my draft, whichever is sooner).

          • Carrie says:

            Aha, I see. I didn’t realize you were referring to one-time blog posts. Your long project payment strategy makes sense.

          • Loraine says:

            So you pay less than the hourly you recommend? I wonder with these types of blogs how much of the writer’s income depends on selling to other writers.

            • Carol Tice says:

              I think many of my guest posters write their post in an hour or two, so hopefully the hourly rate is pretty good. They’re mostly unpacking their knowledge and personal success stories. Hope that explains!

              I’ll also point out that when I started paying $50, most places paid $20 or nothing…and recently raised it to $75-$100, depending on complexity.

  3. Dianna Huff says:

    Jan — I’ve struggled with marketing while busy too. One thing that’s helped me is to pick one thing I’ll do no matter what. That’s been my weekly blog post. I’ve been writing a post a week now for months. Subscriber list is growing again, too!

    • Carrie says:

      I think that is a good strategy. Focus on at least one thing where you can have the most impact or most reach to the most people.

  4. Great article. Freelancers must keep expenses as low as possible. It’s a feast or famine type of business.

  5. Nicole Gregory says:

    Submitting articles never knowing what will hit can be extremely daunting. It is a challenge to keep pushing myself to write when it could be awhile before I see a single penny. At times I start to wonder if I am putting in all these hours for nothing. Those are the moments when I consider giving up completely (writing).

    How does one stay motivated when they are not seeing any results?

    • Carol Tice says:

      I think many writers write because we MUST, Nicole. It doesn’t occur to us to stop, anymore than we think if the air we’re currently smelling isn’t sweet, we should stop breathing. It’s simply something we DO.

      Motivation to write should come from within, not from whether or not some editor says yes or no to a particular idea.

      And you’re never putting in ‘all these hours for nothing’ – because when you write, your writing improves. It’s never a waste of time.

      From the way you phrase this, though, I worry that you are “submitting articles” — sending in completed work. That’s not usually a successful strategy, as most good publications want to assign off a query letter and have input into the exact path your piece will take (unless it’s a personal essay, a market that generally doesn’t pay well and is very competitive). So that may be part of the problem!

      Learning how to write a query that gets you the gig is key to earning, if you want to write for magazines or newspapers.

      • Thank you for your reply Carol. I like how you explained that writing is never a waste of time. It gave me a different perspective that I didn’t even consider before, value isn’t always monetary.

        Honestly that is something that I easily forget, when my husband asks if I am getting paid for a particular piece. If I am working on my blog, his comment can completely derail my train and make me second guess why I write in the first place. I write because I have a passion for it and with the intent for my words to make a difference, no matter how small that difference might be. Yes, money would be nice, but I am never going to improve if I go crawling back to the low standard of quantity over quality found at content mills.

        BTW, I think I phrased my first reply wrong. I don’t submit full articles unless a site prefers that.

        Anyhow, I really enjoyed the article and your comment. I won’t let anyone stand in the way of my dreams.

    • Vinil says:

      Nicole, other than magazines there might be work for company blogs and ghost writing too. I’ve found that networking with other writers help. During busy times, I’d rather outsource some of the work I can’t handle to other writers than turn down my client.

  6. Stephen says:

    Hi Carol,
    Although I am not technically a freelance writer and I still have a steady income, I enjoyed your article. It will help me to become better prepared for the transition to earn a living through my blogs.
    Thanks, Stephen

  7. Vinil says:

    An extremely relevant topic for freelancers. The hardest part is taking the time to track expenses, revenues, and having the discipline to keep an eye on the scorecard at all times.

    I like to categorize my clients as one-off clients and longterm clients. We should definitely charge at least 3 times more for one off clients.

    Building a lead generation system and constantly having a pipeline of qualified prospects helps.

  8. Jade says:

    Hey Dianna! I totally agree we need to have a safety cushion of money and need to naturally be saving in nature xD How do you recommend we manage our time with the marketing and the writing? What do you suggest? Great post by the way! Thank you 🙂

    • Dianna Huff says:

      Hi Jade, Thanks for the nice words. A mentor I used to have recommended spending a full day a week on marketing. When my son was young and I was seriously pressed for time, this was hard to do.

      What I recommend instead is that you find the one or two tactics that bring in inquiries and do those on a consistent basis (vs only when you don’t have any work).

      It also helps to schedule your marketing the way you do client work — and treat your business as if it’s a client. I do my marketing every day from 4:30 AM to 7:00 AM.

  9. Mai Bantog says:

    Thanks for this very timely post, Carol and Diana. As a Den member, I know that I should keep on marketing, but it’s a really a struggle when you have loads of work to do during the bountiful months. This February is one of the dark times, but thank God I have an emergency fund. I typically put in 10% of my income there. I also take time to budget my income every month, so I was able to stretch what I earned last January up to this month.

    So for me it’s really a combination of marketing (even just one LOI or query a day), budgeting, and finding long-term clients that helped me survive these months of drought. I’m also planning to put up a blog that I can monetize for a bit of passive income.

  10. Janet Tilden says:

    Cash flow was a problem for me, too, as a freelance editor. Finally I “trained” my clients to pay me promptly. I submit invoices on the 15th day of the month and the last day of the month, and payment is due within two weeks. Problem solved. Marketing is a different story!

    • Farah Mawani says:

      This is so important. I’m finding it hard to train my clients. Some take extremely long, and require many follow ups, to pay my invoices. They don’t seem to have any understanding or concern for the impact of such late payment. It’s as if they see their payment as a bonus on top of steady income, which is not the case. Especially when all clients take considerably long to make payments. One surprising thing for me, is that the clients who delay payment the longest are large institutions with very large budgets.

      • Carol Tice says:

        It’s all about defining your contract payment terms up front, Farah — I like a 50% up-front deposit and then net 14 days from turning in my draft or finalization, whichever is SOONER.

  11. Williesha says:

    I spend a lot of my time working on my marketing plan, and always keeping something in the pipeline is really encouraging for cash flow. I am doing better at keeping active pitches going.

  12. Very helpful article. It’s true that you can wait a long time between publication and payment. I really could relate to the ways to cut your budget, as most us have things we could do without. Thank you for all you do Carol in the Freelance Writer’s Den.

    • Carol Tice says:

      You’re welcome! I’m a big fan of the Your Money or Your Life book, which I read in my early 20s and which has informed my spending ever since. Actually just about to embark on another expense review to see what we could cut this year…

  13. My recent trick is to write down the amount I made each day on a calendar that i can see in my kitchen. No one else needs to know what those paltry figures mean, but to me it’s a constant check-in to myself about whether I’m putting in enough time in marketing. If the figures are looking sad this week, that means I’ve gotten complacent once again!

  14. Robert says:

    Freelancing is indeed a great way to get some extra income. The dark side, as you put it is that the income may not always make it to your bank account. Thank you for sharing some great ideas and how to handle variable incomes. That’s what freelancing is about, especially if you’re just starting out.

  15. T P Gopinathan Nair says:

    An eye-opener indeed. Need to have some savings for the rainy days, when rain of cash inflow stops. Great advice.

  16. Brent Jones says:

    What a great interview, Carol! This is excellent.

    The topic of cash flow for freelancers — especially new freelancers — will appear in my blog in the next month or two. It’s an important topic, and not a whole lot of people are talking about it.

    There were a couple of truth bombs included in this interview that really stood out to me.

    The first was on mitigating expenses as much as possible. This goes for any new business venture…

    But many new freelancers forget to recognize what they’re doing is a business. They just see it as a thing to make some money while working from home…

    But it can take time to really ramp up a steady and consistent income, as with any new business venture. And in that time frame, both personal and business expenses should be kept as low as possible. Invest sweat equity, not capital, whenever possible…

    Also, to the point Dianna made out waiting 120+ days for final payments… I invoice clients upfront and in full before starting a job.

    If it’s a large job, I do may half now and half at delivery.

    But for the most part, I always collect my fees upfront. I think a lot of freelance writers would be surprised how often clients would agree to this if they would simply ask for it.

    This interview is a great resource. Will share now!



    • Carol Tice says:

      I have friends who go for 100% up front with new clients, too — I haven’t had a situation where I’ve felt the need, but 30-50% up front, for sure!

      And yes, the biggest lightbulb moment I seem to provoke in writers is… “I get it now: I’m a business!” YES.

      That’s the mindshift where you can start really earning well as a freelancer.

    • Dianna Huff says:

      Hi Brent,

      I invoice 50% up front and 50% at a pre-determined milestone (depending on the project). Because I work on complex projects, some can take weeks.

      Invoicing terms are important, but what I’ve found to be just as important is being efficient in terms of how I work so that I’m not going months between deposit and final payment. Not so much working faster, but eliminating distractions. That’s one reason I’ve cut social media. Too distracting and a time waster. I’ve also begun documenting all my processes.

  17. Emma says:

    You caught my attention at “Why You’re Starving”. Lol. I’ve only been freelancing for a couple of months alongside a full-time. The road is a bit rough for me since I’m still trying to build my client list. I’ve been too caught up with the amount of cash coming in because I’m too excited to let go of my main job. Having a handle on the outflow of cash is a great reminder!

  18. Mike Wood says:

    Love this, Carol. I found it difficult to get into a rhythm to earn regular income. It is a BIG struggle for freelancers to time projects with anticipated payments. Then, you have to count on the “anticipated” payments being reality in order to have that “steady income.” It can be done, but you really have to know your clients (e.g., do they pay immediately, 30 days, check, PayPal, etc.).

  19. Lindsay says:

    I have just a few clients who send me regular work – most of it comes from one. I hardly ever market because I have got very stuck in with my current clients. My husband has a full-time job and my clients are very good about paying on time – I submit an invoice at the end of each month and get paid at the end of the next month. It’s more or less the same as getting paid for a full-time job. Also I edit much more than write, which seems to make sign-off a lot quicker.

    All this has made me far too comfortable and it is probably time to start marketing again, especially since my time is by no means filled up. I always get inspired when I read this blog though. Thank you for today’s boost, Carol and Dianna!

    • Carol Tice says:

      Lindsay — when you get most of your freelance work from ONE client…that’s a ticking time bomb.

      One day they decide to move on, and you’re scrambling. That’s why constant marketing is the answer. You want to always have nibbles — because that means you have the power to pick and choose the best rates and clients, and aren’t stuck with whoever you currently have as a client.

  20. Aaron Jordan says:

    Hey Carol Im Aaron. I had a quick question about freelance writing. I am looking for a way to make more cash,and it really is my passion and talent to be a writer. Im 22 and I haven’t had any college education. Im just a guy with an Apple Computer and hundreds of story ideas swimming in my head. Is this the right path to start my career in writing?

    • Carol Tice says:

      I can’t really tell you from this short paragraph, Aaron. But I’m a college dropout myself — that’s not really required.

      Having a lot of article ideas is certainly great — if you’re talking about fiction stories, though, unfortunately there isn’t much of a living in writing those, for most who try it.

  21. suborna says:

    I am just a guy with an Apple Computer and hundreds of story ideas swimming in my head. Is this the right path to start my career in writing?

    • Carol Tice says:

      It’s hard to know without hearing more about what sorts of ‘stories’ you mean, Suborna. If you mean fiction, then that’ll be very hard to earn a reliable living in.

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