THE BUSINESS OF WRITING
October issue of a magazine, and the
editor has advised me how much the
payment will be and that I’ll be paid
in November. So I’ve dropped that
figure into my cashflow forecast.)
Similarly, Amazon KDP issues
royalties for books sold sixty days
after its monthly accounting period.
This means I’ll be paid at the end
of December for any books I sell
through Amazon during October.
Amazon KDP’s prior months’ royalties
dashboard tells me what my royalty
figures are for the previous month.
So, at the beginning of each month, I
simply log on to see how much I’ll be
paid for the prior month’s sales, and
then I add those figures to my cash
flow forecast.Cash flow forecast tool –
expenditure
A cash flow forecast doesn’t just
monitor cash flowing into your
writing business. It can also track cash
flowing out: your expenditure.
I repeat the same exercise with my
expenditure. At the start of my year, I
insert all the known expenditure I will
incur each year, such as my Writing
Magazine subscription in April,
my Society of Authors subscription
in March, my computer software
subscription in January, and so on. As
I become aware of other expenditure, I
add that in.
This means that I can add up all of
the income and expenditure for each
of the monthly columns. Not only
does this show me the actual figures,
as each month passes, but it helps me
to predict my income and expenditure
over the coming months. This is
particularly useful at highlighting any
months where I have more going out,
than coming in.
Being able to see what’s coming up,
both on the expenditure side, as well
as the income side, can be extremely
useful. I often time many of my
subscriptions so that they fall into a
month with good income, such as
when I receive my royalty statements
from my traditional publishers.Forward planning
Cash flow forecasts can help self-
published authors decide when
might be a better time to undertake
a Facebook or Amazon advertising
campaign. This is because you’ll besix-monthly statements from a couple
of publishers, which means I receive
royalties from them twice a year. These
tend to be good months.
I also get PLR money for my books
borrowed from public libraries, and
money for secondary rights from
ALCS. PLR pays out in January,
while ALCS pays out in March and,
sometimes, in September.
Writing this regular, monthly
column means I get paid monthly
by Writing Magazine (Thank you,
Jonathan!) and I know how much
is going into the bank each month.
I also receive an income from my
self-published books on Amazon
and other platforms on a monthly
basis, although these amounts vary
each month.
A cash flow forecast is another tool
that captures this data, when I know
what it is. I have a column for every
month of the year, and then a row for
each income stream.
At the beginning of the year, I fill
in the figures I know I should receive,
and when I should receive them. So
regular magazine monthly columns are
added, as are pieces I do for certain
magazine clients. One pays me on
acceptance, and I know roughly which
months I shall be working for them,
and when I’ll be paid.
Likewise, I do some editing work
for an American publisher, and I
can profile roughly which months
I’ll receive payments from them and
roughly how much that will be.
Completing a cash flow forecast isn’t
always scientific, particularly to start
off with, nor is it cast in stone. It’s a
tool that changes as your writing year
progresses. It tends to be accurate for
the immediate few months, and a bit
sketchier in the future.
If you’re fortunate enough to sign
a deal with a traditional publisher
and get an advance, place the staged
advance payments into your cash flow
forecast. Not only will it help you plan
your future income, but it’s a great
way to visualise your writing success.
For it to be of most use, it’s best to
update this tool as soon as you learn
of any future income. When an editor
accepts an article or short story from
you, record in your cash flow forecast
which month you’ll be paid and how
much. (At the time of writing, I’ve
just had an article accepted for the
charged for your advertising campaign
in one month, but you may not see
the income benefits for a couple of
months afterwards.
For example, if you were to run
a Facebook advert during October,
you’ll be charged for this advertising
in either October or November. That’s
cash flowing out. If your adverts are
successful and generate more sales
of your books on Amazon during
October and November, you won’t
see that income, until Amazon pays
out, some 60 days later, at the end of
December or January.
Therefore, if you’re planning an
advertising campaign for one of your
books, your cash flow forecast can
help identify which months you’ll
have the money to invest in that
campaign, and you can flag up when
you should see the income from
that advertising. And that future
income could help fund your next
advertising campaign.
This is why a cash flow forecast
doesn’t just keep track of future
income and expenditure, but helps us
to plan our writing business for the
future. Book launches cost money,
so scheduling them for a time when
we know there’s money coming in to
cover those costs makes good business
sense. Or, think of it the other way
around – if we need to launch our
new book in six months’ time, but
there’s not currently much income
showing in our cash flow forecast for
that time, we have time to change
that. It’s only by having a cash flow
information that we can see that.
A writer’s toolbox needs a variety
of business tools. In addition to
grammar, spelling, punctuation and
social media skills, we also need the
right tools to crunch some numbers.
Tools for monitoring income and
expenditure, and cash flow forecasting,
might not be our favourite tools, but
if used well they’ll keep our writing
business well-oiled for the future.http://www.writers-online.co.uk NOVEMBER 2019^69Business directory:
FREE TOOLS
Download your free income and expenditure
and cash flow forecast spreadsheet template tools
from Simon’s Business of Writing website: http://www.
thebusinessofwriting.co.uk/free-downloads