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Profit First: 10/25 Allocations

July 20, 2018

Can I make allocations more frequently or on different days then the 10th and 25th?

Yes. Profit First was
designed to be flexible; however, the 10/25 rule is a best practice. The
10th and the 25th are good dates because it achieves a semi-monthly rhythm of
accumulating money and then allocating it (the cash flow
wave.) Additionally, when bills are paid on the 10th and 25th they arrive
at vendors by the 15th and end of month, respectively.  This is when bills
are typically due.

For some
businesses a weekly rhythm is better, especially during the implementation
period. In that case, select a specific day of the week to be the business'
"money day." Allocate funds from the Income account to the allocation
accounts on this specified day each week.

Avoid doing the
allocation process "ad hoc" or more frequently than once a week. A
highly frequent rhythm or sporadic rhythm makes it difficult to observe the
cash flow waves in the business.

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Profit First Strategies helps business owners experience profit.

Profit First Strategies

Profit First is a system that helps you produce profits in your business the first month and always. Using this approach to running a small business you can make profit a habit and not a remote possibility. The Profit First approach starts by rewriting the usual bookkeeping formula so that profit is taken and put in the bank with every bookkeeping cycle. The system follows through by instilling discipline in your budgeting and cash flow management. Read our articles to learn the basics of Profit First and Profit First Strategies that you can use this approach to make you business more successful and your business life more efficient and easier.
Profit First helps you experience profit.

Ronald B. Allen
CEO, Profit First Professional, Fix This Next Founding Advisor
Principle of an accounting firm that’s committed to educating business owners on their financial health, providing a trans-formative strategy and helping them experience their profit!