Erika Jones, CFO, CCTAProfit First Professionals · Certified Fractional CFO and Profit First Professional

Profit First Myths| Profit First Is An Accounting System

17 May 2021 · 1 min

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In this short video, Profit First author Mike Michalowicz addresses a common misconception that the Profit First methodology is an accounting system. He clarifies that Profit First is a cash‑management tool designed to influence human behavior around money. The system is set up through additional bank accounts that act like an umbrella over any existing accounting software. It links to the business’s general ledger, allowing the accounting system to remain unchanged while the Profit First accounts guide cash flow decisions. The video emphasizes that Profit First complements, rather than replaces, existing accounting processes.

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I'm Mike Michalowicz, the author of Profit first, and I'm doing a series of videos to bust Profit first myths. One myth is Profit first is an accounting system, and I don't want to replace my accounting system. Profit first is not an accounting system. What Profit first is, is a cash management tool that manages and channels human behavior. We set it up at your bank, in fact, acts like an umbrella, if you will, with or or over your accounting system. It links in through your general ledger. So whatever accounting system you have, if you have a general ledger and you do, we simply set the additional accounts to reflect the bank accounts that Profit first has set up. Then you can log into your bank account and manage money like you likely do, see what money's there, and make decisions. It'll connect to your accounting, it'll work seamlessly, and your accounting won't change whatsoever.