Decades ago I sold real estate. A hallmark of a straight commission sales job is the uneven pay schedule. Some months I’d have a huge payout. Other months I made zero. Actually, I liked this form of pay because I was compensated for my performance. If I didn’t sell, I didn’t earn. Like any other freelance type job, there are lots of times when you put in the effort and don’t see the payoff.
I had these clients with an incredible large home, and I was hoping to list the home and eventually reap a large commission. I stopped by with a detailed marketing plan and talked with them for several hours. They were uncertain whether to proceed or not and requested I stop by another time. After three visits, I realized these folks liked to hash over the “what ifs” and had no intention of selling.
Do you know how much money I made on that client? Nothing.
There were other clients I met one day and sold a home within the week. My per hour compensation for those types of clients was great.
In the end, it evened out. The harder I worked, the more income I made. The uncertainty was in the reality that I didn’t know which efforts would pay off and which wouldn’t. Over time, I became more astute at figuring out which clients were likely to buy and which ones were just wasting my time.
How to Even Out your Cash Flow
Freelance or commission work requires impeccable cash flow management. There is one way to guarantee that you can pay your bills. When embarking upon a job with an uncertain pay schedule, you must have a cash cushion of at least 3-6 months of living expenses saved up.
What if you don’t have a cash cushion and want to continue working free lance or on commission. There are two alternatives.
- Some commission jobs offer a draw against commission. This means the employer pays you a regular amount (draw). When you make a sale, you are obligated to pay back your draw. This works out nicely in terms of bill paying as long as you don’t draw more than you can reasonably repay.
- In the case of freelancing, you may want to hold another job as well with regular pay until you can build up your savings. Home Depot, retail, fast food, or other jobs don’t pay a tremendous wage, but have flexible hours and provide an interim cash cushion until you build your business and savings.
- Although, not the best alternative, a short term loan is sometimes needed to tide you over. Clearly, if your freelance or commission job does not have potential to pay the bills, you need to find work that is more secure.
Save a portion of every penny you earn and your life and work options improve.
Can’t Get Enough Cash Flow Management?
- How to Manage Your Cash Flow – Boomer and Echo
- What You Need to Know About Cash Flow Management – One Money Design
- Cash Flow; Managing and Improving Ours – Couple Money
- Pay Yourself First – Money Life and More
- Best Money Tips – Take Advantage of Happy Hour – Wise Bread
- 3 Reasons to Focus on Household Cash Flow – Watson Inc.
We all have those months where income does not equal expenses; What are your tips for managing an uneven cash flow?