A huge part of knowing the cash flow of your business is establishing a strong allocation rhythm.
An allocation what?
Your allocation rhythm is how often you log into your bank account and move money from your income account into the designated accounts (profit, owner's pay, taxes & operating expenses).
The standard is the 10th and 25th. This allows you to move money around before invoices are typically due, while also giving you a chance to check in on your cash twice per month.
Personally? I don't do this (and I normally recommend something different for my clients, too).
I tried to do the 10th and 25th for a while, but failed miserably. The day kept slipping past me! Even plugging it into my calendar didn't work. So I changed it.
Instead I do a weekly rhythm. Fridays are my allocation day. It's a chance for me to log in, move money around and pay any outstanding invoices.
There are a couple reasons why I love a weekly rhythm. First of all, it's easier for me to remember. Anchoring it with a day that has significance (Friday- closing out the week) makes is part of my routine.
Secondly, I like having a more consistent pulse on my finances. A weekly check in allows me to make sure things are flowing and are on track. I also log into my accounts less during the week since I am already more regularly checking in.
So, what do you think? What's your rhythm?
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