The Profit First 10/25 rule moves all money from your income account to operating accounts on the 10th and 25th of each month, syncing with when vendors expect payment. You can adjust the dates to match your business's cash flow.
In Profit First, you have a 10/25 rule.
What is that? Good question. So that represents the days of the month, the 10th and the 25th. And the idea is money flows into your business and we're gonna put it into the income account. The income account is a depository-only account. It just collects cash. Cash, never touch the money. So as you get deposits, put it in the income account. Then, twice a month, on the 10th and 25th, all the money in the income account gets allocated out to the other accounts you set up. So you would zero out the income account and allocate it out. The reason we do the 10th and 25th is your OpEx, your operating expenses, will be funded on those days. Then you can pay your bills. And you pay bills on the 10th, they usually arrive by mid-month. And we pay bills on the 25th, they arrive by the end of the month. Those are the two days when bills are typically due. So it gets you in a rhythm with your vendors, and it also allows you to see the ebbs and flows of your business. Money accumulates to your income account, you'll see what your normal expected income is, and then you allocate it all out on the 10th, you do this process again on the 25th, and just by monitoring it, you start setting an expectation of what your income should normally be.
[Speaker] And can I change those dates if I want to?
[Speaker] Oh yeah, right, and you can change those dates. So they're not hard and fast. It's a good starting point, and then as you get the system rolling, then make some tweaks that are better for you. I suggest you start with it just to see how the rhythm serves you.
