Why should I allocate money from the Income account to the Profit, Tax, Owner’s Pay and OpEx accounts on the 10th and 25th instead of daily or as needed?
By Profit First Accounting in 28 May 2024 | 05:37 pm
By doing the allocation process and paying bills twice a month (on the 10th and 25th) you benefit in two ways.
First, doing this process every two weeks means you are doing it in a batch – which means you are more efficient.
Secondly it gives clarity on cash flow trends. He will see the income accumulate and disperse, like waves in the ocean. When he sees trend changes it may indicate an overall change (problem or opportunity). Just like waves indicate the tides.
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