Explore More

How to Manage Cash Flow as a Freelance English Teacher (and Other Financial Issues)

Teaching English online as a freelancer comes with plenty of perks, such as the freedom to choose your own schedule and set your rates, but it also requires you to run your business effectively and stay on top of your income stream. So, how can you succeed monetarily in your tutoring venture? Here’s how you can manage cash flow as a freelance English teacher and avoid making some common financial mistakes.

Learn the business, operational, and marketing skills needed to launch and run your own tutoring business in Bridge’s Specialized Certification Course in Teaching English Online as a Freelancer.

What is cash flow?

When you work for yourself as an English teacher, a huge part of your success relies on the amount of money moving in and out of your business, which we refer to as cash flow. The money you’re bringing in comes from your class earnings or other services you render (e.g., translation or proofreading), while the cash leaving your business is due to work-related or personal expenses that you incur.

If the money entering your business is greater than the amount going out, you have a positive cash flow. Conversely, a negative cash flow occurs when your business is spending more than it makes.

Why is it important for me to learn about cash flow before starting my freelance online tutoring business?

As a freelancer, it’s essential to understand how cash flow can make or break your tutoring business.

  • If you maintain a steady positive cash flow, for instance, you’ll always have ready cash for covering your operational expenses, paying for marketing, and reinvesting in your English teaching equipment in the future.
  • On the flip side, having a negative cash flow may leave you without enough money to cover essential expenses and buffer financial challenges, which can eventually cause your business to fail.

Even though you’re earning profits from your classes, you could still find yourself struggling with a fund shortage when students take too long to pay – since you’re responsible for paying your monthly business expenses in the meantime. Therefore, it’s critical to know what is happening to your money in order to avoid struggling with a cash crunch as you run your business.

What are some tips for effectively managing my cash flow as a freelance English tutor?

Let’s look at some ways to maintain a healthy cash flow for your freelance English teaching business.

Be aware of your working capital

Take stock of the money you have available for funding your business’ day-to-day operations. This entails finding out how much you’re spending on the materials and services you use for your classes, the number of students with overdue invoices, and the amount of cash you have on hand. This way, you’ll easily see how your cash flow will look in the long run.

Manage customers

Being a self-employed English teacher means you’re solely responsible for imposing rules and collecting your students’ fees. Especially if your client base starts growing, it’s important to keep your payment system in order.

  • Be clear about your company policies right from the start. Let your students know about the payment schedule and method before you begin a course.
  • Choose the easiest payment method for your students.
  • Send invoices on time.
  • Have your students pay you upfront, if possible, which makes it easier to avoid cash flow problems. (This may not be convenient for longer courses or regular students, so make sure you collect payments according to the dates you set.)
  • You could request that your students set up an automatic bank transfer, if possible.

Manage your subscription services carefully

As a freelancer, you’ll likely pay for subscriptions to some of the software tools you’ll use to run your business, such as your video teaching platform (Skype or Zoom, for example), accounting software (like Quickbooks), or other tools. Being aware of your subscription options can help you manage your cash flow.

  • Check for the most economical payment options for the subscription services you want to avail. For instance, paying for an annual software subscription usually comes out cheaper than paying for it monthly.
  • You can also reduce your cash outflow by cutting costs. Look for similar but cheaper (or free) options for the services you subscribe to.
  • Set your payment dates on your subscriptions according to your cash flow situation. In other words, if most of your students pay their fees during the first week of the month, choose to pay your monthly expenses around then as well.

Open a business savings account

Avoid overspending on day-to-day expenses, and build an emergency fund by creating a business savings account where you can stash away your surplus cash. This way, you will have a financial cushion for short-term cash flow problems, a cash reserve for “quiet months” or off-peak seasons for classes, or money saved for expanding your business in the future.

Monitor your weekly cash flow

Stay on top of your cash flow by monitoring your class payments, expenses, and overdue fees every week, using the suggested software or tools we’ll cover below, or others.

What tools can I use to manage cash flow as a freelancer?

You don’t have to be a financial whiz or have bookkeeping experience to manage your cash flow — you can simply do it with the help of various online tools.

Accounting software

Managing small businesses has become easier because of accounting software like QuickBooks or Xero, as they simplify and expedite the tasks involved in the financial side of your business as a freelance online English teacher. This accounting software can help you:

  • Keep tabs on your cash inflow and outflow.
  • Track overdue payments.
  • Invoice.
  • Provide quotes.
  • Manage your tax contributions.
  • Collect payments (some accounting software can be linked to your PayPal or bank account to do this).
  • Pro tip: Save on a monthly accounting software subscription by opting for free accounting software, such as CloudBooks or Wave.


If you’re not comfortable using accounting software yet, a virtual spreadsheet, like Microsoft Excel or Google Sheets, is a great place to start as they are user-friendly and offer you generic templates for managing your cash flow.

Online invoicing software

While it’s possible to make, send out, and process invoices through most accounting software, you can also utilize easy-to-use invoice applications, such as Invoice2go or invoicely. A lot of these also let you send overdue invoice reminders, while some even send your students a thank you note when their payment has been received.

Don’t want to spend money on an invoicing app subscription? No problem. You can find a slew of free online invoicing tools, such as PayPal, Square, and Zoho Invoice.

What are some mistakes to avoid when managing cash flow as a freelancer?

Apart from knowing some strategies to keep your cash flow positive, it’s also key to be aware of finance-related issues that could grind your ESL tutoring business to a halt. Let’s look at some of these mistakes and how you can avoid them.

Overlooking startup and high overhead costs

If you’re just getting started as a freelance English teacher, not setting a realistic startup budget may cause you to run out of money even before your business takes off. To avoid this, it’s crucial to choose the most essential items or services you want to invest in.

Similarly, overpaying for expenses tied to running your business or your day-to-day living, like high rental costs or expensive teaching platforms, may also send your cash running out the door quickly.

  • Keeping your overhead costs and personal expenses at bay, or trimming them down if possible, can make a lot of difference not just to your cash flow but also to your profitability.

Find out where it’s best to spend vs. splurge when setting up a freelance online tutoring business.

Not creating a cash flow budget

A cash flow budget allows you to project the estimated amount of cash you expect to receive or spend in a certain period of time. Not having this cash flow forecast can make it difficult to know your cash position — you may not get a clear picture of whether you have enough to cover your monthly bills, if your business will break even, or if you can still set aside personal savings.

  • Make sure to create a cash flow budget — ideally for the next 30 days — so you can align your business receivables with your payables.

Collecting class payments too slowly

You may have lots of students, but if they don’t pay on time or if you don’t collect fees promptly, you could struggle with getting money for paying your bills or expanding your business.

  • Don’t put yourself in a tough financial spot. Instead, be strict with collecting class fees and reminding your students of the payment schedule you established at the beginning.

Not following up on late payments

Ignoring overdue payments or not chasing students who haven’t paid on time could also lead to a cash shortage. Don’t fall into the trap of not demanding your hard-earned money.

  • Make sure to follow up with late payers by sending them a polite email or, if they aren’t responding, calling them.

How can I learn more about being a successful freelancer?

While jumping into freelance English teaching may seem daunting, it’s certainly not impossible to successfully launch and run your own tutoring venture. Here are some other ways you can set yourself up to have a successful tutoring business:

  • Once you’ve obtained your TEFL certification, taking a Specialized Course in Teaching English Online as a Freelancer will equip you with the skills in operations, marketing, time management, and communication that are key to succeeding as an independent ESL teacher. Not yet certified? Browse online TEFL courses to get started.
  • Ask questions and get tips from fellow freelance English tutors from among your circle of contacts and in social media groups or online communities, like the Bridge TEFL/TESOL Jobs Group on Facebook.
  • You can also learn from self-employed professionals in other industries. You may not be in the same line of work, but they can still mentor you when it comes to the business side of freelancing.

Handling your business as an independent English teacher may require responsibility on your part, especially when it comes to managing your finances. But by applying the above tips and avoiding mistakes with cash management, you can assume control of your cash flow and get ahead as a freelancer in the TEFL/TESOL field.

What else should you consider when launching your freelance career? Read an experienced teacher’s advice: 10 Things I Wish I’d Known Before Becoming a Freelance English Teacher

Back in her hometown in the Philippines, Krzl worked as a writer at a TV station before moving to Chile. After she completed her TESOL certification, she worked for language institutes and then decided to become an independent English teacher to business professionals. When she’s not giving classes, she’s either surfing along Chile’s long stretch of coastline, traveling, or practicing photography by the beach.