Episode 16: Your Cash Flow Game Plan

   📍 Welcome to CreativeMind Smart Money, the podcast where creativity and business smarts collide. I’m your host, Samantha Eck, bookkeeper, business coach, and your go to guide for building the creative business of your dreams. Whether it’s mastering your money, streamlining your systems, or growing your business, I’m here to share insights that empower you to thrive.

Plus, I’ll be bringing in industry experts to dive into all aspects of entrepreneurship, so you can turn your passion into profit without losing your creative spark. Let’s get started.  

You’re listening to the Creative Minds Smart Money Podcast, where creativity meets business smarts. And today, let’s talk about something that’s a major game changer for all creative entrepreneurs out there. Cash flow. I know, fun, right?

But listen, if you’re not paying attention to your cash flow, your business can quickly go from thriving to barely surviving. Now before you hit that next button because you think this episode sounds just as boring as our financial statement one, hang tight.

I promise this is going to be a little bit fun. And by the end of the episode, you’re not only going to understand your cashflow, but feel more confident about managing it like the business owner you truly are. Let’s get into it. Let’s start with the basics. What exactly is cashflow?

In the simplest terms, cashflow is the money moving in and out of your business. That’s it. But here’s the kicker. It’s not just about how much money you’re making. It’s about how much of that money is actually sticking around and not immediately flying out the door on expenses. Yes, I’m talking about those inspirational coffee visits.

And here’s the real talk. You can be making a ton of sales, invoicing clients left and right, and still find yourself broke if your cash flow isn’t handled right. Yep. I said it broke. This probably sounds familiar to what I said in that financial statement episode, but this is just as important and very similar.

So why does this matter for creative entrepreneurs? Because your income tends to be inconsistent, right? We mentioned that in that last episode. We’ll have one month where we’re rolling in client payments like Beyonce and the next month we’re like, so anyone hiring a freelance creative? This is where mastering your cashflow can literally save your business.

If you know how to manage the money coming in and going out, you won’t panic every time things get a little slow. Now let’s break down what I like to call the two sides of cash flow. Cash in, cash out. Sounds simple, right? But trust me, if you’re not paying attention to both, you’re setting yourself up for a world of hurt.

Cash in is everything you’re earning. Client payments, sales from your products, any passive income streams you’ve got going on, this is the good stuff. The stuff that makes us feel like we’ve got it all figured out. You know when you see that notification pop up from Stripe and you’re like, yep, that’s right, I’m a boss.

Or you get that little cha ching from HoneyBook And you do a little happy dance, but then there’s your cash out, which is everything leaving your bank account. Bank expenses, subscriptions, software, the million and one tools you think you need, but let’s be real, you don’t need them all. And again, let’s not forget that Starbucks habit.

The key to mastering cashflow is making sure you always have more coming in than going out. It seems obvious, right? But it’s easier said than done. Especially when unexpected expenses pop up or when those slow months hit. Now let’s get into the magic of projecting your cash flow. The part that will make you feel like you’ve got a crystal ball for your finances.

So what does projecting cash flow mean? It’s basically looking at your future income and expenses to predict where your bank account is going to look like in three months or even six months down the line. It sounds really fancy and really complex, but it’s Actually super practical. Here’s a simple way to start.

Look at your expected income. This includes client payments, product sales, recurring memberships, anything you know is coming in over the next few months. And again, I want to make sure anything you know is coming in. So if you know this money is not coming in, don’t account for it. If you already have contracts in place or invoices sent out, this is the money that will flow in as long as your clients pay on time.

We’ll get to that part later. Look at your upcoming expenses. This could be rent for your office space, software, subscriptions, equipment upgrades, and don’t forget your taxes. We all love taxes, right? But seriously, you need to factor these in because we all know Uncle Sam is coming for his cut at the end of the year.

Now we’ll look at the cash flow equation. Subtract your expenses You’re cash out from your income, you’re cash in. For example, let’s say that you’ve got 5, 000 coming in next month from client payments and product sales, but you also know that you have 3, 000 in expenses, rent, software, that coffee delivery subscription that’s a little bit too convenient.

5, 000 subtract 3, 000 equals 2, 000 in positive cash flow. Boom, you’re in the green and you know you’ve got some cushion for the month ahead. But here’s where projecting gets powerful. What if your next month looks a little slow? Maybe your expected income drops to 2, 000, but your expenses are still 3, 000.

Uh oh, now you’ve got a 1, 000 deficit. This is the moment where you can make moves. Either cut down on expenses, get some more work, or tap into any cash reserves that you’ve saved. And we will talk about cash reserves at some point in this podcast, but it’s important to have a cash reserve. So here’s the really big elephant in the room.

What if my clients don’t pay me on time? We’ve all been there. You send the invoice, you wait patiently. Maybe send a plight nudge or two and then nothing. Cue the stress spiral, right? Well, I already covered invoicing in depth in a previous episode, so if you haven’t listened to that one yet, go check it out.

But here’s the deal. Getting paid on time is critical to your cash flow projections. You need to set clear payment terms, like 7 days, 14 days, or 30 days, and enforce them. In that earlier episode, I mentioned adding late fees, and yes, we’re sticking to that. If your clients are late, charge them for it.

Remember, you’re running a business, not a charity. Again, I want to mention that you can have that grace period, but you can’t be as lenient as letting payments go for six, seven, eight months. If someone hasn’t paid you, you need to get what you’re owed. And remember, if you’re a service provider who provides a service that once you hand it off, and they haven’t paid you, it’s completely done.

You need to ensure that you are getting paid before you even do the work, so that that money is in your bank and you can hand off your service without feeling like you’re not earning money. Make sure you’re following up. Sometimes people genuinely forget, but you shouldn’t be sitting there hoping they’ll remember.

Your cash flow depends on it. Okay, now let’s talk about the reality of slow months. Because if you’re a creative entrepreneur, you know this roller coaster all too well. Some months are booming and others not so much. And if you haven’t projected your cash flow, those slow months can really feel like doomsday.

So how do we handle this? Number one, build a cash reserve. I’m not talking about a little financial safety net when the money’s flowing in. Sets them aside for when it’s not. You should aim for at least three months of business expenses and savings. It’ll give you peace of mind when work dries up a bit, and I wanna remind you, like I said, we’ll be touching on that a little bit more in depth in a future episode.

So make sure you’re following the podcast to get that update. Number two, offer payment plans. This one’s a win-win. First of all. You get a steady income stream and your clients can break up their payments into manageable chunks.

It smooths out your income over time and it helps you avoid that feast or famine cycle. The third thing you can do is diversify your income streams. I can’t say this enough, don’t put all your eggs in one basket. If you’ve got client work, great, but what else can you offer? Maybe it’s digital products, templates, workshops, multiple income streams helps cushion those slow months.

Know that in our last episode where I was solo, we talked about our financial statements and building that monthly finance check in routine. Again, whether you’ve got those money Mondays or those finance Fridays, whatever you’re calling it, I’m here to tell you that tracking your cash flow needs to be added into that routine.

Think of this as the next level of your financial glow up. You’re already reviewing your expenses, maybe you’re doing some light budgeting, now it’s time to look at at that cash in versus cash out situation every single month. Take 10 minutes, and I mean literally just take 10 minutes, and look at your upcoming income, your upcoming expenses, and project what your next month is going to look like.

And if it’s not looking too hot, that’s when you can make those decisions in advance instead of scrambling when your bank account has a negative number in it.

📍 Okay. As you reach the end of the episode, let’s recap what we’ve learned today. Cash flow is the main money moving in and out of your business, and you need to be in control of it.

To project your cash flow, look at your upcoming income and expenses and plan ahead. If clients aren’t paying on time, revisit our invoicing episode for tips on setting boundaries and enforcing payment terms. When slow months hit, lean on your cash reserves, offer payment plans and diversify your income.

And don’t forget to add cashflow tracking to your monthly financial routine. It’s an extra step that can seriously save your business from unnecessary stress.

Your cash flow is the key to keeping your creative business running smoothly. Don’t let it be a mystery. Get on top of it and stay on top of it. You’ve got this. If you found this episode helpful, don’t forget to subscribe and share it with your fellow creative entrepreneurs. Let’s keep the money talk going and grow our businesses together.

Until next time, farewell fellow travelers.