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The easiest way to do this is by using a debit or credit card associated with your business bank account. But if your outstanding invoices total $9,000, you know that you can afford (at least from the financial point of view) to be choosier about the work that you take on, to work on some non-paying tasks such as updating your website or marketing to higher-paying clients. So for example if your outstanding invoices only total $5,000, you know that the next month is going to be lean unless you take on a lot more work. Every time you issue an invoice, you enter it into an Excel file with a column that totals your outstanding invoices, so that you know how much money clients owe you. For example, let’s say that your income goal is $7,000 per month. This statistic will tell you how aggressive you need to be about looking for or accepting new projects. Of course you’re going to record your outstanding invoices so that you know whether clients have paid you or not, but you also want to know how much money you should be receiving in the next 30-60 days.
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Track your total outstanding invoices.Keep at least 3-6 months’ living expenses on hand in cash at all times. So don’t let yourself live paycheck to paycheck. And if you (or a family member) are too sick to work for an extended period, you’re left without income unless you have disability insurance. Big clients may unexpectedly change their plans or hire an in-house translator. Freelancing has its highs and lows some months go like gangbusters and other months drip along. Always, always have a savings cushion, especially if you are your (or your family’s) only income.Every time a client pays you, enter that amount into something (a spreadsheet, QuickBooks, Translation Office 3000, etc) so that you have a running total of how much you have earned. People use various accounting tools and processes, but at the very least, track your total freelance income for the year.Even if you do business as a sole proprietor (meaning that you are not incorporated), open a separate checking account that you use only for business purposes. Before you do anything else, separate your business and personal finances.And those of you who are more financially oriented than I am, please chime in in the comments.
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So, it’s worth taking some time to consider whether you’re optimally managing your money. Managing your freelance finances is a) time-consuming and b) absolutely critical to your survival as a freelancer. Disclaimer: I’m not an accountant or an attorney these are just some tips from my own experience and what works for me in my freelance business.