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How to Build a Financial Runway & Scale Your Freelance Business

Table of ContentsUpdated Oct 14, 2020

The longer I build Millo as a place to help freelancers (I’ve been at it for 10+ years, btw), the more I realize we freelancers can benefit a lot from studying the startup world.

Of course, you know I condemn the ridiculous work hours, lack of work-life-balance and unhealthy “hustle culture” many startups embrace.

But there is definitely one thing startups have figured out and we freelancers still struggle with:

Financial runway.

Many of us freelancers live in a feast-famine cycle, never 100% sure we’ll make as much money next month as we did this month.

So while startups are out there hiring faster than anyone else, freelancers take the polar opposite approach and almost never hire someone.

And so, our businesses never grow.

And we get stuck doing everything.

How to Build a Financial Runway & Scale Your Freelance Business

Having a financial runway fixes that problem

But if you have a financial runway, even a small bit of runway, that problem essentially goes away—if you’re smart about it.

“What is a runway?” you might be asking.

It’s essentially a cushion of money in the bank that you can spend in order to make more money.

For example, if you knew you could bill a client $1,000 for something that you can hire a contractor for $500 for, all you’d need is a way to make that initial $500 payment.

Ask any startup you want: if they could spend $500 and make $1,000, they’d do it.

All… day… long.

Here’s how you can improve your cash flow

Here’s a helpful hack I recently stumbled on for creating your own 45-day financial runway.

First, before spending any money, you have to go out and book a client for work you know you can hire a sub-contracted freelancer to do.

For example, you might go out and sell a blog post for $600, knowing you can sub-contract it for $350.

Once you’ve got that set up, use a service like Melio Payments to pay using a credit card.

That little trick will let you take advantage of up to 45 days of “float” until your next credit card billing cycle.

They call it float… I call it runway.

And it’s a game changer.

Now, you pay your contractor $350, deliver the final project, and collect $600 from your client for a nice profit of $250 (or 42% profit for no billable work hours on your part).

Why go with Melio Payments?

I recently discovered this small (totally legal) loophole as I began to explore Melio payments (they’re sponsoring this blog post too).

As I looked a bit deeper into it, I realized Melio is the perfect payment platform for freelancers who are looking to scale.


If you’re good just doing everything yourself (I’m talking, sales, billing, marketing, invoicing AND all the billable work too like writing, designing, coding, or whatever you do), then this method probably doesn’t mean much to you.

But if you’re ready to scale up your business by hiring some help (like the guests we coach on our podcast), then this automatic 45-day cushion is a really big deal.

Not only do they have this nice 45-day cushion from which you can build a nice beginner-level runway, but they also offer:

They make it easy to pay anyone, anywhere

Here’s a really cool feature of Melio Payments. If your vendors or sub-contractors prefer a check-in-the-mail but you prefer to pay with a credit card, Melio will convert your card payment into a bank transfer or a paper check mailed right to the person you’re paying.

They make it easy to accept client payments (for free)

If you’re tired of paying a service fee to accept payments online from your clients, Melio can help. Instead of waiting a week or more for checks, receive payments directly to your bank account in just 1-3 business days without any fees whatsoever.

Sync your payments with Quickbooks

If you work with an accounting app like Quickbooks, your payments and other critical info will sync directly with your QB account so you can see everything in one place.

More ideas of where to spend your financial runway

And you don’t have to use Melio’s 45-day float period just to pay sub-contractors (although, I think you totally should).

You can also pay other vendors or businesses you work with on a regular basis. For example, if you’re a designer and need to purchase stock photos or vector files to complete your next project, pay with Melio and you won’t have to foot the full bill for up to 45 days.

Plus you’ll earn rewards with each purchase.

The idea is to spend money on things you KNOW will bring a break-even or profit-positive return in less than 45 days.

For example, you could:

Hire a salesperson

If you’re having a hard time finding new clients, try hiring a salesperson you trust to drum up some business for you. Instead of paying them on commission because you don’t have the cash to pay them upfront, take advantage of your 45-day float period.

Hire a marketing expert

Similar to hiring a salesperson, you may want to hire a marketing expert and give them the goal of paying for themselves within 30 days in order to keep their contract open with you. Then, pay with Melio and have 45 days to make your money back with new business.

Invest in software that boosts revenue

Of course, you don’t have to hire a person yet if you’re not ready. There are plenty of other ways to boost your sales—one of which is investing in software. Using Melio to pay for something like Pipedrive or which will boost your ability to reach out to more clients and close more deals would be a no-brainer investment you should be able to recoup within less-than 45 days.

A final caution about runway

Finally, if you think your business could benefit from Melio’s up to 45-day float period in order to build a small runway, here’s what I suggest:

Make sure you have a 100% chance of making your money back and paying your bill on-time. I would never suggest you take on high-interest debt to pursue something that’s not a sure thing.

If you aren’t sure you can pay off your debt within the 45-day window, it’s not a wise decision since it’ll just land your business in further debt.

Try Melio Payments for free

If you think you could benefit from a 45-day runway like I’ve explained in this post, then you should take a look at Melio Payments.

You can use Melio for 100% Free ACH payments and receivables (that includes no sign-up fees or monthly subscription fees for you or your clients).

Or, for 2.9% fee—which is pretty standard—you can free up cash by paying with a credit card and enjoy up to a 45-day runway.

Thanks to Melio Payments for supporting the work we’re doing at Millo.

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Written by Preston Lee

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Preston Lee is the founder of Millo where he and his team have been helping freelancers thrive for over a decade. His advice has been featured by Entrepreneur, Inc, Forbes, Adobe, and many more.

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