Can I make allocations more frequently or on different days than the 10th and 25th?
By Profit First Accounting in 28 May 2024 | 05:37 pm
Yes. Profit First was designed to be flexible, yet 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 (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.
But for some businesses a weekly rhythm is better. In that case, select the day of the week (e.g. Monday’s) to allocate funds from the Income account to the allocation accounts.
Avoid doing the allocation process more frequently than once a week or ad hoc. A highly frequent rhythm or sporadic rhythm makes it difficult to observe the cash flow waves coming and out of the Income account.
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