6. Managing Cash Flow

Managing cash flow is simple: get money in as soon as you can and hang on to it for as long as possible. Although this might not seem too important when you have plenty of projects on the go and are working flat out to meet deadlines, it is a crucial task in running a business. Your clients will certainly take it seriously (as well they might, since cash flow problems can cripple the healthiest of companies), with the knock-on effect that you might have to wait a lot longer to get paid than you expect. There is a number of things you can do to keep on top of your cash flow.

• Invoice early. If not as soon as you finish a job, then at least by the end of the month.
• If you are working on a project that will take some time to complete, ask to be paid in instalments – every month, for example.
• If you have any reason to suspect your client might take a long time to pay (or not pay at all), you may want to insist on payment or part-payment up front.
• Give clients an incentive to pay up quickly, such as a five per cent discount on invoices settled within seven days. Smaller, owner-managed companies often appreciate this kind of deal.
• Keep an eye out for invoices that have not been paid after 30 days and do not be afraid to chase up settlement. Often a polite call or email asking whether the invoice has been cleared for payment will be enough to prompt a cheque.
• Be prepared to step up the pressure if you have still not been paid after a couple of months. Many copywriters worry that hounding their clients will spoil the relationship they have built up and jeopardise their chances of future work. But you have to ask yourself what value there is in a client who will not pay you.
• As a last resort, consider demanding interest on any late payment (which you are legally entitled to do) or threatening to take the matter to the small claims court. I have yet to hear of a copywriter actually making good on such a threat, but if you ever have to, then bear in mind that it will probably help your case if you have kept copies of all relevant correspondence.
• Pay cheques into your account the day you get them.
• Take time to find out how you can smooth out the payment process with your client. Many companies, for example, have problems processing invoices unless they quote the number of a purchase order raised by the person making the order.
• Some clients may want you to add your bank details to their supplier list so they can pay you electronically. This is good. If you are on the system you are much more likely to get paid on time.
• I personally do not advocate delaying payment to your own suppliers unless you really have to; after all, you may well have to ask them for favours in the future. But do take advantage of any opportunity to hang on to your cash, for example by paying for a new computer in instalments.

If all the above seems like too much hassle, consider the following story regarding a copywriter friend of mine, Gareth Llewellyn. In the late 1990s Gareth started writing occasional features for a website whose managers he got on with particularly well. The work increased and Gareth concentrated on meeting deadlines rather than sending out invoices. Then the website started to run into trouble and Gareth suddenly realised he was owed quite a lot of money – around £ 5,000, which he was by then relying on to pay his tax bill – and had yet to see any of it. In the end, it was over a year before the bill was settled. ‘The bank and the taxman were unhappy with me to say the least,’ he says. ‘The principle is, don’t do the next piece of work until the first is paid for.’